By: Kathleen Retourne

London 12/10/2012 - Base metals tracked slightly lower on Friday morning on concerns about waning Chinese demand, with trading volumes unexceptional.

“Industrial metals extended their consolidation pattern, with market participants waiting for more tangible evidence of improving end-use demand,” Commerzbank said.

While the eurozone dominated sentiment for much of this week, the focus snapped back to China today ahead of data due for release over the weekend. With LME Week also about to kick off, investors are moving on to sidelines until there is greater clarity.

“In the short term we would expect some consolidation into the weekend and ahead of LME Week. On balance, we still feel that China's infrastructure spending could keep prices buoyant for a while,” FastMarkets analyst William Adams said.

China's trade balance, tentatively scheduled for Saturday, is forecast to come in at 20.4B against the previous month’s 26.7B. New loans and M2 money supply are also due.

This morning, EU industrial production growth at 0.6 percent beat a forecast for a fall to -0.4 percent and was in line with the previous month's figure.

The euro was last at 1.2971 against the US dollar, up 0.3 percent and building on yesterday's uptick from a 10-day low at 1.2825. Comments from the IMF yesterday provided support - managing director Christine Lagarde favours giving more time to Spain and Greece to reduce budget deficits, according to reports.

Investors are still waiting to see if Spain will request a bailout from Brussels. After Wednesday's down grade to BBB- status by ratings agency S&P, market participants are hopeful that it will do so but Spain continues to drag its heels.

Data releases scheduled for later today include the September US PPI, the October US preliminary UoM consumer sentiment index and inflation expectations and the September US federal budget balance.


ANTWERP STOCKS UP 212 PCT SINCE START OF WEEK

Antwerp aluminium and lead stocks rose for the second consecutive day, with combined stocks now at 177,375 tonnes, up 55,475 tonnes or 212 percent on the start of this week.

Aluminium at $2,001 was down $14 on the previous day’s close. Cancelled warrants fell 11,675 tonnes to 1,673,225 tonnes and stocks rose 22,300 tonnes to 5,069,575 tonnes, with Antwerp inventories up 31,025 tonnes at 116,425 tonnes - they have risen 114 percent since Monday. Rotterdam inventories continue their steady rise, up another 3,000 tonnes to 6158,250 tonnes.

Lead at $2,156 was down $27 after cancelled warrants fell 3,200 tonnes to 93,100 tonnes and stocks jumped 19,125 tonnes to 296,725 tonnes - stocks in Antwerp at 60,950 tonnes are up 58,675 tonnes since the start of the week.

Zinc was hit hardest yesterday by aggressive selling at the close. It was last softer still around one-month lows, down $26 at $1,941. Inventories climbed 3,725 tonnes to 1,011,975 tonnes and cancelled warrants 15,975 tonnes to 382,875 tonnes due to a 6,800-tonne increase in Chicago and a 7,325-tonne rise in Johor

Copper at $8,171 dropped $68.50, while inventories slipped 3,650 tonnes to their lowest since September 19 at 215,900 tonnes. Cancelled warrants at 50,025 tonnes were down 400 tonnes.

Nickel dropped to its lowest since September 14 to $17,369 and was last at $17,405, still down $320. Socks rose 240 tonnes to 124,608 tonnes.

Tin at $21,725 was $175 lower after inventories at 11,755 tonnes were down 485 tonnes due to drawdowns in Johor.  

Steel was last a little softer at $345/360 while stocks were unchanged. In the minor metals, cobalt was indicated at $27,300/29,000, with stocks and cancelled warrants both down one tonne to 386 and 42 tonnes respectively. Molybdenum was neglected.


(Editing by Mark Shaw)