LME MORNING - Most metals edge higher, investors remain jittery

By: Kathleen Retourne

London 24/05/2012 - Base metals were mixed in Thursday morning LME premarket trading, with some consolidation alongside some bargain-hunting – particularly for copper.

Investors, however, remain nervous amid a steady stream of poor economic data from Europe and an apparent slowdown in Chinese demand.

European data this morning undershot, weighing on sentiment. EU flash manufacturing PMI for May at 45.0 was worse than the expected 46.1, EU flash services was expected at 45.5 but came out at 46.5 and Germany’s Ifo business climate was poor at 106.9 against a forecast of 109.4.

“The weight of negative data will take its toll. Copper would need to finish the week above $7,730 per tonne to stop the rot, would favour a move towards $7,450 as ongoing negative sentiment prevails,” a trader said.

Some scattered bargain-hunting buying was seen, while the euro was also staging a modest corrective bounce - it was last around a still-weak 1.2568 against the dollar but above Wednesday's 22-month low of 1.2542.

The wider background of fears of a eurozone breakup, as well as the apparent slowdown in China's economic growth, suggest that any respite to risk-aversion sales and investment liquidation may be short-lived, traders said.

"The worry over a Greek-inspired collapse of the European monetary union and a racketing down of demand projections out of China will continue to hurt the metals complex for the foreseeable future," broker RBC said.

Early on Thursday, EU leaders ended an informal summit with few definite measures to solve the ever-growing financial crisis, with the potential for a Greek exit from the euro growing.

The heads of the 27 EU countries did agree to give institutions such as the European Investment Bank the task of drawing up proposals for growth ahead of yet another summit in June.

US durable goods orders, initial jobless claims and flash manufacturing PMI - a new data series from Markit - are due later today alongside a host of central banker speeches.


Copper at $7,594 per tonne was up $63 on the previous day’s close. LME inventories were down a net 1, 625 tonnes at 224,075 tonnes - only warehouses in Busan reported an increase in stocks, up 582 tonnes to 34,800 tonnes.

Cancelled warrants were also lower, declining 2,775 tonnes to 25,950 tonnes. Volumes are solid, with 10,600 lots changing hands on Select so far.

Nickel at $16,934 was up $179. Stocks rose 350 tonnes to 105,510 tonnes, while cancelled warrants were unchanged at 6,858 tonnes. Lead rose $9 to $1,939 after inventories fell 900 tonnes to 352,550 tonnes and cancelled warrants rose 50 tonnes to $74,100 tonnes.  

Aluminium edged $2.75 higher to $2,012.75. Inventories were up 3,350 tonnes to 4,956,325 tonnes, predominantly due to a 9,250-tonne increase in Vlissingen.

Cancelled warrants jumped 21,725 tonnes to 1,754,450 tonnes. Singapore saw a 19,300-tonne jump in cancelled warrants to 30,900 tonnes, while Gwangyang rose 8,400 tonnes.   

Zinc fell to $1,877, a $2 loss. Inventories were down 2,350 tonnes to 940,975 tonnes, while cancelled warrants fell to 70,475 tonnes. Tin was little changed at $19,565, up $40 after stocks fell 370 tonnes to 13,625 tonnes.

Steel stocks remain unchanged, with prices soft at $400/475. In the minor metals, cobalt stocks fell 13 tonnes to 336 tonnes, while cancelled warrants were down 14 tonnes at 87 tonnes. Three lots have changed hands on Select, the last at $30,000. Molybdenum was indicated at $29,750/30,350.

(Additional reporting by Martin Hayes, editing by Mark Shaw)