LME MORNING - Copper back below $7,000/t as metals dip on dollar strength

By: Eddie van der Walt

London 12/07/2013 - Base metals were in negative territory in the LME premarket on Friday, with copper drifting back below the $7,000 per tonne mark as the market sought to consolidate and the dollar regained its footing, traders said.

The US currency's hangover from Federal Reserve chairman Ben Bernanke's dovish comments in mid-week had started to fade, analysts said, and the dollar regained some strength on a better-than-expected Federal Budget, pushing it higher and metals lower, analysts said.

"Yesterday, copper jumped sharply on the back of Bernanke’s comments, but failed to push through the $7,050 per tonne level," analysts at ANZ said.

Bernanke, in a question and answer session after a speech to the National Bureau of Economic Research, said that there may not be an automatic increase in interest rates when unemployment hits 6.5 percent.

"The overall message is accommodation [and] a highly accommodative policy is needed for the foreseeable future," Bernanke said.

The dollar initially plummeted to a near three-week low against the euro at 1.3207, but by Friday morning, it had recovered to 1.305.

Yesterday's US weekly unemployment claims number, at 360,000 - from a forecast of 342,000 - gave further impetus to the opinion that easing may yet last longer. The US Federal Budget, however, came in at $116.5 billion, a positive surprise.

In data today, the market's attention is firmly on the University of Michigan consumer sentiment number, forecast at 85.3, and on producer prices index.

In wider markets, Asian equities are mixed. The Nikkei is a quarter of a percent higher at 14,506 and the Hang Seng is down three quarters of a percent at 21,281.

COPPER THE MAIN LOSER

Among the metals, copper was the biggest loser, slipping back below $7,000 and drifting as low as $6,910. It was last at $6,938 per tonne, down $62. Trade has been relatively robust, with about 10,000 lots changing hands by 10:00 BST.

Inventories fell a net 4,400 tonnes to 640,775 tonnes - the lowest since June 19 - with 2,575 tonnes leaving Johor. Cancelled warrants decreased by 4,275 tonnes to 336,950 tonnes.

Aluminium was down $3 at $1,832 per tonne. Stocks declined by 5,675 tonnes to 5,411,425 tonnes - the lowest since June 13 - with 2,250 tonnes leaving Johor. Cancelled warrants fell by 6,075 tonnes to 2,214,475 tonnes.

Zinc fell $6 to $1,894 per tonne, even as inventories declined by 5,725 tonnes to 1,008,500 tonnes, the lowest since October 12. The biggest move came in New Orleans, where 2,575 tonnes of material left warehouses. Cancelled warrants declined by 5,725 tonnes to 665,900 tonnes.

Sister metal lead declined $7 to $2,073 per tonne. Inventories declined by 550 tinnes to 193,825 tonnes and cancelled warrants also fell 550 tonnes to 108,175 tonnes.

Nickel slipped $28 to $13,607 and stocks declined by 348 tonnes to 194,406 tonnes. Cancelled warrants fell the same amount to 27,900 tonnes.

Tin was down $150 at $19,300 with stocks climbing 25 tonnes to 14,435 tonnes. Cancelled warrants jumped by 1,185 tonnes to 5,285 tonnes.

Steel billet was quoted at a wide $101/210, with stocks unchanged, while minor metals cobalt and molybdenum were neglected. Cobalt stocks fell by two tonnes to 465 tonnes, with cancelled warrants also falling two tonnes to 132 tonnes.

(Editing by Martin Hayes)

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