LME MORNING - Metals prices slide to multi-week lows, demand outlook cloudy

By: Martin Hayes

London 29/07/2013 - Base metals mostly fell away again during Monday LME premarket trading, extending pre-weekend losses, undermined by sluggish demand prospects stretching into the summer slow period, traders said.

"Sentiment is fragile and the market remains sensitive to macro-economic data from the US, Europe and China," LME RDM Sucden said.

The short-term mood has now turned uncertain ahead of this week's run of key economic data and important monetary events. Given the deterioration in sentiment, the market is paying little heed to euro strength - at 1.3285 against the dollar, the single currency was not far off Friday's five-week high of 1.3300.

So far today, copper, aluminium and zinc have fallen to three-week lows, nickel has hit its lowest for two weeks and lead has dropped to its softest for one week.

"Markets are being a bit nervous as for why the Chinese government had to state that they wanted to keep the economy growing by at least seven percent this year. Even though import figures have been good so far, we are hearing that currently demand is weak," broker Triland said.

In mid-week, China's official July manufacturing PMI is forecast to come in at 49.8 after reading 50.1 in June - a number below 50 indicates a contraction. Last week, the HSBC Flash PMI came in at 47.7.

As well this week, a Federal Open Market Committee meeting starts in Washington, DC, on Tuesday. The statement, due for release on Wednesday, will be closely scrutinised for changes to the US central bank's third quantitative easing (QE3) programme - though most market watchers still believe tapering will have to wait until the following meeting in September.

The advance US second-quarter GDP figures is due this week, which ends with the keynote data event - the US July non-farm payrolls report on Friday. Today, by contrast, is a light data day, with US pending homes sales figures due later.


Copper hit $6,820, its lowest since July 10, and then traded recently at $6,840 per tonne, a $30 loss from Friday, when prices fell two percent from levels above $7,000. Warehouse inventories continue to decline, however, with a ninth successive daily decline seen. Stocks fell a net 2,400 tonnes to 618,775 tonnes, a six-week low.

Aluminium also buckled to a level last seen on July 10, trading at $1,791 before recent business at $1,800, a $6 gain from Friday - prices fell 1.6 percent then. Inventories were down 7,000 tonnes at 5,476,175 tonnes.

In others, nickel touched a two-week low at $13,770 before holding at $13,796, a $54 loss. Stocks climbed 702 tonnes to 200,280 tonnes, just 54 tonnes below last week's all-time highs.

Zinc touched $1,845.75, its lowest since July 9, and then traded at $1,847, an $8 decline - inventories rose 4,100 tonnes to 1,055,125 tonnes. Sister metal lead was down $4 at $2,046 after inventories rose a modest 100 tonnes to 198,350 tonnes.

Tin fell $50 to $19,400, with stocks unchanged at 14,545 tonnes, the highest since July 5. Steel billet was neglected, while inventories fell 2,080 tonnes to 56,160 tonnes, the lowest for six months.

In the minor metals, cobalt was quoted at $26,500/28,000, while molybdenum was neglected.

(Additional reporting by Eddie van der Walt, editing by Mark Shaw)