London 15/11/2012 - Base metals were confined to narrow trading ranges once more in premarket LME trading on Thursday in small volumes.
Indeed, the complex has been in consolidation mode for much of the week, a state of affairs that is expected to continue until further clarification on how the US will deal with the fiscal cliff and end-of-month data from China.
“Very narrow ranges right now - tension in the Middle East isn't going to help either, as it will discourage people from taking positions,” a trader said.
Israeli attacks on multiple Gaza Strip targets on Wednesday were the most intense since 2008 and were intended to cripple the militants' abilities to fire rockets over the border into Israel.
The conflict has the potential to escalate into a ground war in the Hamas-controlled enclave and strain already-fragile relations with neighbouring Egypt and other Islamist-led governments in the region.
The eurozone, meanwhile, has fallen into a second recession since the financial crisis began in 2008 after reporting two consecutive negative quarterly GDP figures. Third-quarter GDP for the region came in at -0.1 percent after the second-quarter figure was -0.2 percent.
Still, there were mixed figures on a country-by-country basis and, given the recent run of poor eurozone data, the fall into recession was largely priced in.
Indeed, the euro was steady, holding at 1.2755 against the US dollar, up from the two-month low of 1.2659 it hit on Tuesday after the US Federal Reserve hinted at more bond purchases next year.
The US government has around six weeks to reach a compromise before falling off the so-called 'fiscal cliff' that would automatically trigger $607 billion in spending cuts and new taxes.
“In order to get real traction we may need to wait for progress on the US Government’s finances and from further signs from China that its economy is turning higher,” ANZ Research said.
SIDEWAYS THEME INTACT
Copper at $7,655 per tonne was up $15 on the previous day’s close. Tightness in nearby spreads has eased, with contangos in both Nov/Dec and Dec/Jan of $0.25 and $1.75 respectively.
Stocks were down a net 700 tonnes to 253,475 tonnes, while cancelled warrants at 37,750 lost 625 tonnes.
Aluminium dropped $5 to $1,965. Inventories were 8,000 tonnes lower at 5,087,100 tonnes due to drawdowns across most locations - Detroit stocks fell 4,700 tonnes. Singapore was the only location to post an increase, up 3,000 tonnes to 475,900 tonnes.
Cancelled warrants at 1,824,900 tonnes were down 9,050 tonnes - they hit a fresh all-time high earlier this week.
Lead at $2,181.75 was $0.25 lower, while inventories and cancelled warrants both fell 3,075 tonnes to 323,800 and 117,675 tonnes, respectively.
Zinc declined $7.75 to $1,942.25 despite a 2,825-tonne drop in inventories to 1,151,875 tonnes, while cancelled warrants were 3,150 tonnes lower at 555,350 tonnes.
Nickel edged $24 lower to $16,131 - stocks at 133,458 tonnes slipped 144 tonnes. Tin at $20,500 was marginally higher, up $25 - inventories were unchanged at 11,485 tonnes but cancelled warrants fell 490 tonnes to 4,520 tonnes.
Steel was quoted at $335/340. Inventories in Antwerp continue to trickle lower - stocks and cancelled warrants both dropped 2,015 tonnes to 90,350 tonnes and 44,070 tonnes respectively. The minor metals were at contract lows, with cobalt indicated at $23,000/24,000 and molybdenum offered at $26,500.
(Editing by Mark Shaw)