LME MORNING - Base metals gain on FOMC minutes, weaker dollar

By: Eddie van der Walt

London 11/07/2013 - Base metals made solid gains in Thursday's LME premarket following the release of the Federal Open Market Committee's latest minutes and chairman Ben Bernanke's comments in Cambridge, Massachusetts on Wednesday.

Copper, lead and zinc pushed to multi-week highs, while aluminium reached its highest in a week in the wake of developments in the US.

The minutes showed that the FOMC engaged in an in-depth discussion about how financial markets were reacting to quantitative easing (QE) and what might be the best approach to eventually exit QE3. The Fed is now committed to purchasing $85 billion in new debt per month in an open-ended programme.

The Fed's current projections are for the unemployment rate to be at 6.5-6.8 percent at the end of 2014, an upgrade from the from 6.7-7 percent estimated in March.

"Participants generally agreed that the committee should provide additional clarity about its asset purchase program relatively soon," said the minutes. It directed Bernanke to "describe a likely path for asset purchases in coming quarters that was conditional on economic outcomes."

However, some participants worried that that approach would limit the Fed's flexibility in adjusting QE in response to changes in economic conditions, which they viewed as a key element in the design of the purchase programme.

The minutes sent the dollar tumbling, with the currency plummeting to 1.3207 against the euro - the lowest since June 21. It has since recovered somewhat, however, and was last at $1.304.

In wider markets, Asian equities pushed higher, the Hang Seng gained 2.5 percent to 21,437, and the Nikkei added 0.4 percent to 14,472.

The data calendar today is again focused on US jobs numbers, with the weekly new unemployment claims number forecast at 342,000. This will be followed by the release of the Federal Budget for June, forecast at $42.1 billion. There will also be statements by German Bundesbank president Jens Weidmann and UK monetary policy member David Miles.


Among the base metals, copper was the biggest riser - it regained the $7,000 level in heavy trading, setting the highest since June 19 at $7,049.25. It was last at $7,013 per tonne, up $205 or nearly three percent with about 21,600 lots changing hands by 10:15 BST.

Warehouse stocks decreased by a net 825 tonnes to 645,175, with cancelled warrants falling 1,375 tonnes to 23,200 tonnes.

Lead climbed to the highest since June 18 at $2,115 per tonne and was last still up $35.75 or nearly 1.75 percent at $2,107.75 per tonne. Inventories fell by 500 tonnes - all out of Johor - to 194,375 tonnes. Cancelled warrants fell by 500 tonnes to 108,725 tonnes.

Zinc saw a one-month high at $1,922.50 per tonne, and it was last up $21 at $1,919. Stocks fell by 5,925 tonnes to 1,014,225, New Orleans seeing 2,500 tonnes leave. Cancelled warrants fell by 5,700 tonnes to 671,625 tonnes.

Aluminium was up $24.75 at $1,844.75. Warehouses shed 8,325 tonnes of material, with Detroit seeing 3,425 tonnes leave. Total inventories now stand at 5,417,100 tonnes. Cancelled warrants were 23,725 tonnes lower at 2,220,550 tonnes.

Nickel gained $205 to $13,825, with a 42-tonne increase in stocks to 194,754 tonnes. Tin was up $250 at $19,800 per tonne, with inventories unchanged at 14,410 tonnes.

Steel billet was last quoted at $150/210 and stocks fell by 130 tonnes to 74,750 tonnes. Cobalt was quoted at $28,500/31,100 and molybdenum was neglected. Stocks in the minor metals were unchanged.

(Editing by Martin Hayes)