LME MORNING - Metal prices resume slide, copper/aluminium set 3-wk lows

By: Martin Hayes

London 30/07/2013 - Base metals were back on the defensive during Tuesday LME premarket trading, with negative short-term sentiment back in play, pushing prices to fresh multi-week lows, traders said.

So far, copper, aluminium and zinc have drifted back and hit fresh lows since early-July, while nickel, under pressure from record inventories, has fallen to its weakest for two weeks. Business has been relatively slow while the complex gears up for a string of economic and data events this week.

"The metals are vulnerable to further weakness as a bearish interpretation of policymakers’ decisions and of the data could send prices through support levels, which, in turn, could trigger further down-legs," William Adams of FastMarkets said.

In currencies, the euro was nudging higher but having little impact on sentiment - it stood around 1.3270 against the dollar, having stepped back from five-week highs of 1.33 hit on Friday.

From mid-week onwards, monetary policy meetings are in focus - the Federal Open Market Committee meeting, starting today, concludes on Wednesday with an after-hours statement, while the ECB meeting is on Thursday.

On the economic data side, China's official PMI will be released on Wednesday, as will US GDP and private-sector employment figures. The latter is a precursor to the keynote data event - the US July non-farm payrolls report on Friday.

"The fundamentals for the metals remain weak so gravity is on the side of price weakness but much will depend on the spin the data and policymakers’ decisions have on the market. Given the volume of data out over the rest of the week, we should be braced for choppy trading," Adams added.

Today, however, economic releases are thin on the ground. The German Consumer Climate index was 7.0, against a forecast 6.9, while Spanish GDP fell by the expected 0.1 percent. US data this afternoon includes the CB consumer confidence reading.


COPPER INVENTORY SLIDE CONTINUES, MARKET CHECKS FALL NEAR $6,800

Copper fell as low as $6,802.25, a fresh three-week low, and then edged back up to $6,815 per tonne, still down $63 from Monday's kerb close. Inventories continued to fall, with a net 5,225-tonne drawdown bringing the total down to 613,550 tonnes, the lowest since June 13.

Aluminium fell back below the short-term swing point of $1,800 to touch $1,787, a fresh low since early July. Recent business was at $1,792, a $6 loss - inventories fell 2,250 tonnes to 5,473,925 tonnes.

In others, zinc dropped to $1,836.50 and then traded $6 lower at $1,840. Stocks were down 1,550 tonnes at 1,053,575 tonnes. Sister metal lead at $2,052 was $13 lower, with inventories up 1,875 tonnes at 200,225 tonnes.

Nickel eased to $13,587 before holding at $13,617, an $83 loss - the 510-tonne increase in stocks lifted the total to a fresh all-time peak of 200,790 tonnes. Tin eased $215 to $19,710; stocks, however, fell 545 tonnes to 14,000 tonnes.

Steel billet was neglected but inventories were down 2,015 tonnes at a new six-month low of 54,145 tonnes. In the minors, cobalt's three-tonne stock increase lifted the total to a three-and-a-half-month peak of 482 tonnes. The market was unquoted, having fallen to $26,500 on Monday, its lowest since mid-April. Molybdenum was ignored.


(Editing by Mark Shaw)

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