LME MORNING - Metals bar tin slip as economic sentiment sours, aluminium at 2013 low

By: Kathleen Retourne

London 28/02/2013 - Base metals, with the exception of tin, were on the back foot in Thursday's premarket, giving up earlier gains and heading into negative territory.

Aluminium is bearing the brunt of this downturn, dropping to its weakest level since November 29, 2012 on Thursday, slipping below the psychologically important $2,000 level.

“Zinc and aluminium both have some negative crosses forming in the charts which will likely see some fresh technical shorts in the market looking for lower prices,” RBC Capital Markets said in a note.

“There will likely be some relative value players looking to be long aluminium and short zinc as zinc has been trading at a premium to the light metal so far in 2013 after having traded at discount for most of 2012," it added.

The euro is also under pressure from poor eurozone data - it was last at 1.3162 against the dollar.

The German unemployment change for January at -3,000 came in below the expected -5,000, while the previous month's reading was revised downward to -14,000. While EU CPI was as expected at 2.0 percent, EU core CPI disappointed at 1.3 percent. French consumer spending also undershot in January, falling 0.8 percent.

Additionally, renewed worries about instability in Europe and uninspiring economic growth indicators from China are keeping many market participants on the sidelines.

"New economic impetus would be required for a more durable stabilization," broker Credit Suisse said. "In this context, PMIs for China and the US due this Friday will be watched particularly closely."

Also overhanging markets are the automatic spending cuts totalling $85 billion that will come into effect in the US on Friday unless Congress decides to delay them temporarily, which at this point appears unlikely.

“None of the [metals] looks particular strong though even though equities are strong. On balance we think the metals will continue to consolidate until more is known about the US sequester,” FastMarkets analyst William Adams said. "Given the complacency in the broader markets we would not be surprised by some negative developments."

Data due from the US today includes unemployment figures, preliminary GDP, the preliminary GDP price index and the Chicago PMI.

Copper at $7,879 per tonne was down $. Stocks were up for the 11th consecutive day, rising a net 2,350 tonnes to 446,700 tonnes, with the bulk going to New Orleans. Cancelled warrants continued to slip, down 1,150 tonnes to 25,575 tonnes, of which 14,475 tonnes are in Antwerp.

Volumes on Select have improved on yesterday - around 7,470 lots had changed hands by 11:00 GMT.

Aluminium bottomed out at $1,997, down $23 or 1.1 percent on the previous day’s close. Volumes on Select have been higher in the past couple of days - around 20,180 lots had changed hands on Select by the kerb close on Tuesday and today 7,300 lots have already traded by 11:00 GMT.

Stocks moves were unsupportive - inventories edged 950 tonnes higher to 5,162,050 tonnes, while cancelled warrants slipped 7,700 tonnes.

Zinc edged down $10 to $2,068 after stocks climbed a further 1,150 tonnes to 1,195,400 tonnes and cancelled warrants fell 4,525 tonnes to 624,175 tonnes.

Lead dropped $14 to $2,291 despite stocks falling for the fourth successive day, down 675 tonnes at 287,275 tonnes, although cancelled warrants slipped 1,625 tonnes to 149,600 tonnes.

Nickel was last at $16,642, down $58, after stocks rose 174 tonnes to 157,980 tonnes and cancelled warrants fell 1,104 tonnes to 22,968.

Tin is the only metal to trade positively - the metal was last at $23,539, an increase $64. Inventories slipped 105 tonnes to 13,600 tonnes although cancelled warrants at 2,385 tonnes were down 85 tonnes.

Steel was offered at $330, with no change in stocks, while in the minor metals cobalt was indicated at $25,000/25,750 and molybdenum was offered at $24,700.


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

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