Funds Money to Stay Away from Nonferrous Metals, Mr. Humphreys

Norilsk Nickel’s chief economist, Mr. David Humphreys said worldwide nonferrous metal market plunges due to concern for recession of the world economy after the summer. He said, at interview with a reporter of Japan Metal Bulletin, the market also drops retroaction of overvalued caused by speculative money of funds. He said large amount of money will be away from nonferrous market for a while after speculative funds made major loss during the plunge.

International copper price renewed record in July when the settlement hit US$ 8,985 per tonne at London Metal Exchange. The price dropped to around US$ 3,500 in October when fund players liquidated the positions under financial crisis. LME market plunged for lead, zinc and nickel. Especially nickel price hit 5-year low at less than US$ 10,000 per tonne. LME price recovered US$ 4,000 per tonne for copper and US$ 10,000 for nickel last week. However, Mr. Humphreys said the move is rebound when players cover the short position.

Index funds tend to invest in metal market as part of the strategy for long term fund operation with diversification of risk. Mr. Humphreys expects such funds will keep certain positions in nonferrous metals.

Mineral majors get larger and the market gets more oligopoly when metal prices surged since 2003. However, Mr. Humphreys said such majors show sign to change the strategy. He said the majors now focus on saving money and cost cutting when ailing financial institutes have no reserve money for merger and acquisition.