By: Kathleen Retourne

London 30/08/2012 - Base metals were stuck in their recent ranges on Thursday morning, drifting sideways ahead of an anticipated clarification of further US loosening of monetary policy from the Jackson Hole meeting that begins today.

“Prices are ranging for now,” a trader said. “Economic data out today and tomorrow may precipitate movement but all eyes are on fixed on the Jackson Hole meeting to give more meaningful direction.”

Markets have been hopeful that this year’s Jackson Hole meeting, which begins today and will run until Saturday, will provide the platform for Federal Reserve chairman Ben Bernanke to announce a third round of quantitative easing (QE3), as he did in 2010.

But there is a risk of disappointment and, should no QE3 be announced, sentiment could turn more bearish.

"Overall, the metals seem to be holding patterns ahead of what unfolds from Jackson Hole," FastMarkets analyst William Adams said. "Although there may be some initial disappointment if QE3 is not announced - we don’t think it will be - the likelihood that QE3 will be kept firmly on the table may provide comfort."

Uncertainty also ran high on the topic of Chinese monetary easing. Although many analysts continue to forecast a near-term cut to the country's reserve requirement ratio - possibly in anticipation of a weak manufacturing PMI on Saturday - others believe that China will to use more delicate tools.

Meanwhile, German Chancellor Angela Merkel is in Beijing where she will talk with Chinese leaders about expanding trade and solving the eurozone debt crisis. Chinese Premier Wen Jiabo told Merkel that Spain, Italy and Greece must take “comprehensive measures” to stem the crisis, Bloomberg reported.

Eurozone data released earlier came in below expectations - German unemployment change in July was 9,000 against a forecast 7,000 and last month's reading was also revised higher to 9,000 from 7,000. The eurozone retail PMI for August also undershot at 44.4 against a previous 46.4.

US data due for release later includes the July core PCE price index, July figures on personal spending and personal income and weekly unemployment claims.

In currencies, the euro is little changed at 1.2548 against the dollar.


MOST METALS UP, LEAD LOWER

Copper at $7,621.75 per tonne was up $46.75 on the previous day’s close. Inventories were 3,850 tonnes lower at 230,175 tonnes, with large removals from Busan and Gwangyang. Cancelled warrants dropped 2,400 tonnes to 36,900 tonnes.

Lead at $1,973 was down $3 despite a 1,100-tonne drop in stocks to 311,475 tonnes. Cancelled warrants at 78,125 tonnes were up 3,350 tonnes to their highest since May 22 due to an increase in Detroit.

Aluminium was $4 higher at $1,897. Stocks fell 10,700 tonnes to 4,878,950 tonnes, due primarily to destocking in Detroit and Vlissingen, while cancelled warrants at 1,696,425 tonnes were down 8,025 tonnes.

Nickel, the only metal to close positively yesterday, held its ground - it was last at $16,430, up $130. Inventories were up 498 tonnes to 118,662 tonnes, while cancelled warrants were unchanged at 14,604 tonnes.

Zinc gained $8 to $1,864 after inventories and cancelled warrants both declined 1,575 tonnes to 953,650 tonnes and 124,575 tonnes respectively.

Zinc production in Chine fell to 367,600 tonnes in July, its lowest for two-and-a half years, data supplier Shanghai Metals Market reported.

“Many smelters had carried out extensive maintenance work, which also explains China’s relatively high import activity of late,” Commerzbank said. “In July, net imports climbed to a four-month high of a good 36,000 tonnes."

"Since the maintenance work is largely finished now, more supply is likely to reach the market again, which will counter any significant rises in zinc prices," it added. "Although the LME’s stocks of zinc decreased somewhat recently, they remain close to a 17-year high.”

Tin, which enjoyed a jump of more than $2,000 last week, is paring those gains. It was last at $19,640, up $40 on yesterday’s close but considerably lower than last week’s peak of $20,900.

The metal was hit by reports that Indonesia’s PT Timah has restarted spot sales, with other local producers expected to follow suit. Stocks were up 25 tonnes to 11,635 tonnes while cancelled warrants dropped to 5,485 tonnes.

Steel remained soft at $350/380 despite a 1,365-tonne stock drop, the 15th consecutive day of declines to 52,000 tonnes, while cancelled warrants at 18,785 tonnes were down on yesterday's 20,150 tonnes.

In the minor metals, cobalt was offered at $30,000 and molybdenum was bid at $26,000.


(Editing by Mark Shaw)