LME MORNING - Metals drift from initial multi-week highs, followthrough fades

By: Martin Hayes

London 30/04/2012 - Base metals checked back from initial multi-week highs during Monday LME pre-market trading, lacking some followthrough to Friday's upbeat closes and looking to consolidate last week's covering rally.

"It is slow - China is closed today - and, on balance, most of them are around their [Friday] closing levels now," a trader said.

Chinese markets are closed today and Tuesday for Labour Day holidays, which will also see many European centres sidelined on Tuesday as well, making for some patchy trading conditions.

Nevertheless, prices have bounced off downside support levels, largely paying little heed to some adverse data in recent days, with short-term technical considerations to the forefront.

Copper rose to its highest since April 4, zinc its strongest since March 21 and lead its best since March 14. Meanwhile, aluminium and tin both hit their best since April 12.

"We have seen lot of CTA buying over the last few days, and the funds may have been in as well. However, the old [eurozone] concerns are still out there," the trader said.

In other markets, European equities were stable but the euro drifted back to stand around 1.3235 against the dollar, ahead of US data releases later, including the April Chicago PMI, the March Core PCE Price Index and personal spending and personal income figures for March.


COPPER STOCK SHRINKAGE CONTINUES

Copper, which had touched $8,496.75 at one stage, hit its highest since April 4 and then settled back at an unchanged $8,415. Today, warehouse stocks fell a net 3,475 tonnes to 248,350 tonnes, a fresh low since November 2008, although there was a 6,400-tonne drop in cancelled warrants.

In the spreads, 'TOM/next' (tomorrow/next day) was trading at $8.00 backwardation, while cash/threes widened to trade at $150 premium, its steepest since August 2008.

"Spreads are still widening, China is closed Monday and Tuesday - all adds up to firmer prices," LME RDM Sucden said.

Lead touched $2,163, its highest since March 14, and then eased back to $2,144, up just $4. Stocks declined 2,275 tonnes to 361,100 tonnes, the lowest since January 30. Cancelled warrants jumped 12 percent to 76,900 tonnes, a fresh peak, with a 4,875-tonne cancellation in Barcelona.

Aluminium reached $2,118, its highest since April 12, before recent trade at $2,107, down $1. Inventories fell 10,725 tonnes to 5,024,900 tonnes, the lowest since February 7.

Zinc slipped back from a six-week high to sit at $2,044, still up $3.50, even after stocks climbed 3,075 tonnes to 913,650 tonnes, the highest since May 1995.

Nickel business at $18,090 was down $10 - inventories soared by 2,142 tonnes to 103,902 tonnes, the highest since September 2011.

Tin was $135 higher at $22,635, with a 60-tonne stock fall seen. Steel was a wide $490/505, while inventories climbed 650 tonnes to 31,265 tonnes. The minors were neglected, with cobalt indicated at $30,100/30,750 and molybdenum at $30,000/31,500.


(Editing by Mark Shaw)

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