London 12/02/2013 - Base metals retreated gently during Tuesday LME premarket trading, led by copper, which was around its lowest for nearly two weeks - the downward drift due to the absence of many Asian participants for holidays was maintained, traders said.
"It is off because of the holidays - there was no real volume overnight, and that says it all. There is no reason to get involved at the moment," a trader said.
The current desultory trend is expected to continue in the short term, with other financial markets also drifting at present. The euro, like other markets, was taking a breather from recent gains, holding in a tight range and currently little-changed at some 1.3380 against the dollar.
"With the most important consumer China absent due to the Chinese New Year holidays, sentiment is particularly shaky and it does not take much for prices to fall," broker Credit Suisse said.
Nearly all key Asian centres remain closed today, while in China itself exchanges there are on a week-long holiday closure before reopening on February 18. This has left the metals complex bereft of incentives and direction and, with prices compacted within tight ranges once more, the bias is generally to the downside.
"The weakness could continue in the next few days, but markets could rebound once the Chinese New Year holidays draw to a close," Credit Suisse added.
This week has seen a meeting of the eurogroup and there has been debate among eurozone officials in response to concerns raised by French President Francois Hollande regarding the need for an exchange-rate policy set by EU leaders. Later this week, there is a G20 meeting, where currency and exchange-rate policy settings will be in focus.
The data side is again light today, although later this week Germany, France and Italy will release their latest quarterly GDP figures.
"It’s likely that we will see another week where the market takes short-term cues from economic data and political headline news," LME RDM Sucden said.
COPPER STRUGGLES, LOWEST SINCE LATE-JANUARY AS INVENTORIES NEAR 400,000/T
Copper spiked down to $8,166.25 at one stage, its weakest since January 31, and then settled at $8,172 per tonne, a $27 loss from the Monday kerb close. In inventory data, stocks rose a net 75 tonnes to 399,850 tonnes, the highest for 15 months.
Aluminium was soft below the current $2,100 pivot point, trading at $2,095, an $8 decline. Inventories were down 7,700 tonnes at 5,142,450 tonnes, with regular outflows from Detroit and Vlissingen. In spreads, the June/July period was around $12/15 backwardation.
In others, zinc business at $2,176 was down $16 - the market's recent uptrend to one-year highs of $2,218 has stalled. Inventories were down for the ninth day in a row, dropping 2,500 tonnes to 1,188,100 tonnes.
Lead traded at $2,373, a $15 loss, having hit a two-week low of $2,369.50 at one stage. Stocks resumed their downtrend, falling 375 tonnes to 287,625 tonnes - this is the 16th decline in the last 17 days, with the total not far off the four-month lows of 287,500 tonnes hit last week.
Nickel trades at $18,211 against a previous $18,175. Stocks were up 426 tonnes at 154,122 tonnes, the highest since April 2010. Tin was $100 lower at $24,750, with a marginal 15-tonne fall in stocks to 13,350 tonnes.
Steel billet was indicated at $300/340, with stocks static for the 22nd day in a row at 83,070 tonnes. Cobalt was indicated at $25,000/26,500, while molybdenum was neglected. Inventories of the minor metals were both unchanged.
(Editing by Mark Shaw)