LME MORNING - Base metals tread water, copper awaits further clarity on Kennecott mine closure

By: Kathleen Retourne

London 12/04/2013 - Base metals were soggy in Friday morning LME trading, drifting lower while awaiting direction from US data and a meeting of eurozone finance ministers.

Prices had ticked up late on Thursday afternoon on a stronger euro and news of a massive landslide at Rio Tinto’s Kennecott Utah Copper’s Bingham Canyon Mine along a geotechnical fault line at its north eastern wall, which has resulted in the suspension of some operations.

“Copper saw a $100 move on the news late yesterday,” a trader said. “It has come down from this but [Bingham Canyon] is quite a big deal and could be closed for months, which would be positive for the metal.  As well, we are seeing some improving technicals for copper, zinc, lead and aluminium at the moment, which are cautiously friendly.”

There was mixed data out of the eurozone this morning. The German WPI at -0.2 percent undershot the expected 0.3 percent but EU industrial production at 0.4 percent beat the expected 0.3 percent.

Market participants are now likely to switch their attention to the March US retail sales data set for release later today, which could alter the shaky outlook on the US economic recovery. Also scheduled for release today are the March US PPI, the April US preliminary UoM consumer sentiment index and inflation expectations and February US business inventories.

Additionally, eurozone finance ministers will meet today in Dublin, where they are expected to discuss bailout extensions for Ireland and Portugal.

“We’d expect choppy trading conditions... it’s the end of the week and many will be looking to square up positions ahead of the weekend,” RBC Capital Markets said.


Aluminium at $1,885 per tonne was $13 lower despite a jump in cancelled warrants to 2,030,200 tonnes, the highest since February 7. Vlissingen cancelled warrants rose 47,000 tonnes to 926,775 tonnes and the Detroit total rose 22,150 tonnes to 882,975 tonnes. Total stocks rose a net 2,650 tonnes to 5,194,750 tonnes.

Copper at $7,568 was $42 lower - stocks continue to build, up 3,475 tonnes to 593,650 tonnes, with increases in Antwerp, Johor and New Orleans. Cancelled warrants reached another all-time high, up 2,350 tonnes at 158,350 tonnes.

Nickel at $16,165 was down $105 after stocks increased 1,008 tonnes to 169,386 tonnes, a fresh all-time high.

“Nickel seems to be stuck in its range and I can’t see a reason for it to break out,” the trader said. “There is a lot of metal out there and, with a lack of demand, the fundamentals do not stack up. We could see some short-covering spikes but this overhang is a big deal.”

Lead at $2,073 was down $12 - although stocks fell 800 tonnes to 259,375 tonnes, cancelled warrants slipped 700 tonnes to 142,800 tonnes. Sister metal zinc at $1,890 was $24 lower after stocks rose 1,225 tonnes to 1,136,050 tonnes and cancelled warrants dropped 5,525 tonnes to 656,850 tonnes.

Tin at $22,801 was $59 lower after a 15-tonne increase in stocks to 14,480 tonnes and a 275-tonne drop in cancelled warrants to 2,990 tonnes.  

Elsewhere, cobalt was indicated at $25,500/26,500, while stocks were unchanged. Steel and molybdenum were neglected.

(Editing by Mark Shaw)