Commerzbank Cautions Of Possible 'Disappointment' For Base Metals After EU Summit

Commerzbank fears “disappointment” is possible for base metals after Wednesday’s European summit on debt issues, but nevertheless says inventory data is becoming a supportive influence. Market sentiment has been euphoric for metal markets lately, “almost as if the crisis is being blended out completely,” the bank says. When copper hit $7,800 a metric ton temporarily early Tuesday, it was roughly $1,100 higher than at its low on Thursday. “Other metals are also making strong gains. We believe the optimism is exaggerated, though, and see potential for disappointment overall, especially in view of forthcoming political events,” Commerzbank says. Nevertheless, the bank notes that inventories are declining for some metals, with nickel stocks in London Metal Exchange warehouses falling to the lowest level since February 2009. Also, stocks for some metals, including copper, may continue to shrink as indicated by a rise in canceled warrants. “Cancelled warrants show how much material is being requested for delivery from the warehouses and is seen as an indicator of demand. The picture therefore appears to be brightening somewhat,” the bank says.