By: Kathleen Retourne

London 24/10/2012 - Base metals traded sideways on Wednesday, marking time ahead of the release of US data and the conclusion of a two-day Federal Reserve meeting later today.

The complex had ticked during Asian trading after Chinese data surprised to the upside but the move was capped by weakness in the euro - the single currency was last at 1.2934 against the dollar - triggered by poor data from the eurozone.

Flash manufacturing and services PMI data from the eurozone was mixed. While French data beat expectations, German figures disappointed - German Ifo business climate also fell to its lowest since March 2010 at 100.

Poor German manufacturing and services PMIs pulled down the eurozone-wide reading. The eurozone flash manufacturing PMI was expected at 45.3 but came in at 46.6, while the services PMI at 46.2 was below the forecast 46.5.

Earlier, China’s October HSBC flash manufacturing PMI came in at 49.1, up from 47.9 in September and the strongest reading since July.

“The surge suggests that the economy is recovering, which could translate into greater demand for metal,” Commerzbank said.

Attention will now turn to the US Fed meeting. Although no major policy changes are expected after the US central bank launched a third round of quantitative easing last month, the market will scrutinise any comments about the health of the US economic recovery or policy projections.

“With many expecting no real surprises after the significant action [the Fed] took last month and ahead of the November 6 general elections, prices could track sideways,” ANZ Research said.

This afternoon, European Central Bank president Mario Draghi is scheduled to give a speech. US data scheduled for release includes the October flash manufacturing PMI and September new homes sales.


METALS MIXED

Copper at $7,865.25 per tonne was off its $7,918 high but still up $34.25 on the previous day’s close. Stocks were little changed, down a net 250 tonnes at 222,350 tonnes, while cancelled warrants at 47,100 tonnes were down 975 tonnes.

Aluminium was last at $1,930, down $17, with stocks at 5,057,575 tonnes down a net 1,925 tonnes. A 7,125-tonne increase in Baltimore was offset by drawdowns in Vlissingen, New Orleans, Detroit, Gwangyang and Antwerp. Cancelled warrants fell 11,900 tonnes to 1,757,050 tonnes.

“The aluminium market will remain ‘challenging’ into year-end on excess supply and weak European demand,” Fairfax' John Meyer said.

Zinc was marginally higher, up $2.50 to $1,849.50, in strong turnover - around 6,100 lots have changed hands on Select so far. Inventories slipped 2,875 tonnes, due mainly to declines in New Orleans, and cancelled warrants at 369,425 tonnes were also 2,875 tonnes lower.

Lead edged $1 lower to $2,022, while stocks and cancelled warrants both fell 1,575 tonnes to 310,975 tonnes and 107,675 tonnes respectively. Nickel was last at $16,321, a $182 increase, after inventories dropped 24 tonnes to 127,914 tonnes but cancelled warrants climbed 120 tonnes to 11,226 tonnes.

Tin at $20,300 is $45 higher still after earlier peaking at $20,455, while stocks edged up five tonnes to 11,760 tonnes and cancelled warrants were unchanged at 3,950 tonnes. Steel is $15 lower at $330/365, with inventories and cancelled warrants both down 3,770 tonnes at 112,905 tonnes and 63,050 tonnes respectively.

In the minor metals, cobalt was indicated at $26,500/27,500 and molybdenum at $23,800/24,700.


(Additional reporting by Gregory Holt, editing by Mark Shaw)