LME MORNING - Base metals gather momentum on US fiscal cliff hopes

By: Kathleen Retourne

London 29/11/2012 - Base metals climbed on Thursday morning on hopes that the US will reach an agreement before falling off the fiscal cliff, while technical buying also provided support.

“Yesterday’s sell-offs became downward spikes, suggesting good underlying buying interest. With copper back above $7,800 and the other metals either heading higher, or well placed to do so, it looks as though the markets’ upward momentum may gather pace,” FastMarkets analyst William Adams said.

The euro also rebounded to 1.2990 after President Barrack Obama and senior Republican John Boehner separately expressed the opinion that a deal over the fiscal cliff could be brokered.

The fiscal cliff is a range of tax rises and budgetary cuts with a total value of $600 billion that are due to come into force at the start 2013 and could send the US into recession if not repealed.

News earlier this week that Greek bailout plans have been approved continue to support to euro

“There has been another bailout for Greece, which has given values a boost," a trader said.

Dec/Jan spreads continue to create interest - Aluminium was last at $14.50/15.50 backwardation and copper at $5.75 contango .

“Dec/Jan aluminium keeps getting bullied,” the trader added. “Copper spreads have moved wider, too.”

The day should be relatively heavy on the data front, with weekly US unemployment and preliminary third-quarter GDP numbers due out. Earlier, the October change in German unemployment at 5,000 was better than the expected 15,000.


Copper at $7,831.50 per tonne was up $66.50 on the previous day’s close, while stocks fell a net 850 tonnes to 249,125 tonnes and cancelled warrants at 34,725 tonnes were down $600 tonnes.

“Lingering concerns about Greek debt and the US fiscal situation are likely to limit gains to around $7,800 in the next few days. Further out we still see scope for a rally on the back of improving sentiment towards China and signs that the decline in Europe’s copper demand has bottomed out,” ANZ Research said.

Aluminium was the day's star performer - at $2,042, it hit its highest since October 10 and was up $42. Inventories were up 11,275 tonnes to 5,189,525 tonnes after Vlissingen stocks climbed 13,350 tonnes to 1,390,725 tonnes and Gwangyang 3,000 tonnes to 45,775 tonnes. Cancelled warrants were down 8,050 at 1,778,625 tonnes.

Lead gained $35 to $2,223.50 even after stocks rose 875 tonnes to 362,350 tonnes and cancelled warrants at 159,200 tonnes were unchanged. Sister metal zinc was also higher, rising $34.50 at $2,021.50. Inventories at 1,198,100 tonnes were down 2,350 tonnes and cancelled warrants were stagnant at 613,350 tonnes.

Nickel at $17,196 was up $266, with stocks were marginally lower at 136,356 tonnes and cancelled warrants up 2,028 tonnes to 16,398 tonnes. Tin at $21,750 was $325 higher. Stocks fell 25 tonnes to 4,755 tonnes and cancelled warrants at 4,755 tonnes were unchanged.

Steel was last at $330/350. Antwerp continued its drawdown in stocks, down 2,015 tonnes to 51,025 tonnes - total stocks now stand at 72,800 tonnes - and cancelled warrants fell 1,625 tonnes to 24,440 tonnes.

In minor metals, cobalt was indicated at $22,600/24,000 - stocks were unchanged. Molybdenum was neglected, while inventories fell 12 tonnes to 132 tonnes and cancelled warrants fell 12 tonnes to zero.

(Editing by Mark Shaw)