LME MORNING - Base metals all lower, dollar regains some ground

By: Eddie van der Walt

London 24/09/2012 - Base metals followed equities and the euro lower in start-of-week LME trading, with a disappointing German Ifo business climate index read exacerbating the post-stimulus slump.

"The hangover after the quantitative easing parties was felt throughout all markets; some profit-taking in recent uptrends led to overall patchy developments," Credit Suisse said in a note. "Market participants await positively skewed hard data going forward to have the last week’s risk-on mode justified."

This week, the focus should return to data, with key releases expected from the US and Germany. Today's key data event saw the German Ifo business climate figure for August at 101.4, down from 102.3 in July. This is its lowest read since March 2010 and its fifth consecutive decline.

"The companies surveyed are again less satisfied with their current business situation," Ifo president Hans-Werner Sinn said. "They also expressed greater pessimism about the future. The curbing forces on the German economy continue to prevail."

With the dollar regaining some strength against major currencies, the dollar prices of metals declined. The dollar index was last at 79.68, up 0.30, with the euro at 1.2908 against the US currency, down almost two-thirds of a cent.

In wider markets, the FTSE 100 was 24 points lower at 5,827, with the Dax dipping 39 points to 7,411. In commodities, Brent crude oil was last at $109.69 per barrel, down $1.73, while gold lost $13.33 to 1,758.87 per ounce.

On Wednesday, the German preliminary CPI is expected to come in at zero percent, down from 0.4 percent. On Thursday, the change in unemployment is expected to come in at 10,000 during August, up from 9,000 in July.

Yesterday, French Prime Minister Jean-Marc Ayrault proposed that Athens be given more time to make the reforms needed to comply with its bailout terms.

And Spain appears to be moving closer to requesting a bailout via the European Stability Mechanism. Spain is working behind the scenes to seal an agreement that would see the European Central Bank buy Spanish debt, the Financial Times reported.

From the US, final GDP growth for the second quarter, the change in durable goods orders and the usual weekly unemployment claims figures are due on Thursday. New US home sales figures are due out on Wednesday.

China is preparing for an eight-day holiday, which encompasses the mid-autumn festival on September 30 and the National Day holiday over October 1-7.


Copper was last at $8,208.75 per tonne, down $72.75 in fairly brisk trade, with more than 7,300 lots traded on Select as of 10:30 BST.

Inventories rose 475 tonnes to 219,950 tonnes. Busan, at 500 tonnes, had the largest inflow, while 325 tonnes left St Louis. Cancelled warrants climbed 4,125 tonnes to 39,000 tonnes

Aluminium, meanwhile, lost about 1.3 percent to $2,088.50, down $27.50. Stocks dropped 4,900 to 5,080,950 tonnes, with Vlissingen stocks down 3,000 tonnes, Johor down 2,100 tonnes and Detroit down 1,025 tonnes. Cancelled warrants were 10,025 tonnes lower at 1,630,000 tonnes.

Lead is also down, retreating from sharp gains on Friday. It was last at $2,258, down $30, despite inventories falling further - stocks fell 2,375 tonnes to 281,250 tonnes. Singapore stocks 1,550 tonnes and Long Beach was down 650 tonnes. Cancelled warrants fell 1,300 tonnes to 96,250 tonnes.

Zinc was last at $2,092.50, down $23. Stocks rose 525 tonnes to 977,425 tonnes, with a net inflow of 2,000 tonnes in New Orleans and 1,450 tonnes leaving listed warehouses in Port Klang, Malaysia. Cancelled warrants fell 2,725 tonnes to 359,650 tonnes.

Tin was last $420 or more than two percent lower at $20,330 after stocks gained 15 tonnes to 11,975 tonnes and cancelled warrants fell 15 tonnes to 7,405 tonnes.

Nickel was also lower, down $218 at $17,957. Inventories rose 1,614 tonnes to 122,466 tonnes, with the total inflow in Rotterdam. Cancelled warrants were 4,320 tonnes higher at 16,968 tonnes.

Cobalt was last quoted at $27,300/29,500 and steel billet at $345/370 but molybdenum was neglected. Stocks and cancelled warrants of steel billet and molybdenum were unchanged but cobalt stocks dropped six tonnes to 382 tonnes, with cancelled warrants falling six tonnes to 44 tonnes.

(Editing by Mark Shaw)