LME open interest data suggest changing positions  :Macquarie Research,

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LME open interest data suggest
changing positions
 The LME’s latest open interest data suggest that new short positions had
been built in most base metals markets over the last month. However, the
data for the last week suggest new longs have come into some markets.
Latest news
 LME base metals prices moved up in trading on Monday with the re-opening of
Chinese markets after the Golden Week holidays, some positive economic data in
Europe (French, Italian IP; German exports) and an appreciation of the euro.
Lead made the most headway, with an advance of 2.6%, while copper closed
with a gain of 1.7%. Precious metals prices also recorded modest rises, with
the exception of platinum, which fell by 1%.
 In Indonesia, security forces reportedly opened fire on striking workers at
Freeport-McMoRan’s Grasberg mine, killing one and critically injuring another.
The strike began on 15 September, although the company claims that some
staff have since returned to work. Nonetheless, the company has yet to reach
a final agreement on a new labour contract, with unions asking for a substantial
rise in wages. An earlier nine-day stoppage in July resulted in lost output of
almost 16,000t of copper-in-concentrate. Grasberg is the world’s third-largest
copper mine, producing ~625,000t of copper-in-concentrate in 2010.
 Freeport is also struggling to settle negotiations for a new labour contract at its
Cerro Verde mine in Peru, where a partial stoppage began on 29 September.
Negotiations were set to resume on Monday. The company claims output at the
310,000tpa mine has not yet been affected. Elsewhere, Southern Copper’s
workers are threatening to strike over claims the company is not complying with
current collective agreements. In our opinion, the risk of further disruptions and
increased output losses is rising as industrial relations become more fractious.
 In Indonesia, tin surveyed for export prior to shipment (as required by the
Ministry of Trade) fell for a third month in succession in September, declining by
37% MoM and 24% YoY to 5,233t. This is the lowest monthly total seen since
December 2008 and follows the steep drop in the tin price that leaves it over
25% below its level at the start of August, despite a modest rally last week.
The Indonesian Tin Industry Association has said that tin exports would be
stopped from 1 October until prices recover to $25,000/t, while state-controlled
Timah, the country’s largest producer, has said exports would continue at prices
above $23,000 to 24,000/t. Whether a ban on exports at present prices will be
enforced remains to be seen, but with the global tin market already running a
significant deficit, any decline in exports from the world's second-largest
producer country is likely to lead to an increased call on stocks, and we note
LME stock cancellations have spiked and now stand at 20% of total stocks.
 CME Group has increased the initial margin on platinum futures contracts to
$4,950, from $3,850 previously, for traders in the speculative Tier 1 category.
The maintenance margin has also been increased.
 Iron ore prices fell sharply after Golden Week, with The Steel Index 62%Fe
assessment falling $3.5/t on Monday to $166.5/t CFR China, its lowest level
since March 2011. In our view this reflects a lack of reported activity over the
holidays rather than any sudden downturn in sentiment on Monday.