LME MORNING - Base metals mostly steady, consolidate as fundamentals calmer

By: Martin Hayes

London 28/06/2013 - Base metals were trading routinely during the LME pre-market on Friday, holding not far off Thursday's solid final levels and building on a relatively steady performance in the previous session, traders said.

Trends in other markets were supportive as well, with macroeconomic volatility having eased - the euro was stable around 1.3045 against the dollar, while equities were steadier, following on from Asia.

Business and movements have been fairly low-key but activity and volatility is seen picking up later as end-month, quarter and half-year considerations come into play.

"There seem little appetite for bargain hunting and prices are languishing above recent support. With today being the last trading day of the second quarter, we may see some book-squaring, which could lead to short-covering," William Adams of FastMarkets said.

Although prices are not that far off multi-month and multi-year lows - aluminium set a fresh four-year low on Thursday - there appears to have been some support at these lower levels.

"After several days of heavy downside pressure, commodity markets finally found some support, following equity markets where the recovery started earlier in the week," Credit Suisse said. "Improving conditions in the Chinese money market and somewhat better-than-expected economic data should help prices to stabilize as we approach the weekend."

Today, the US data flow includes the Chicago PMI, UoM consumer sentiment index and inflation expectations. For next week, the focus will be firmly on the release of China's manufacturing PMI for June on Monday - ANZ sees a sharp decline in the reading.

"Market sentiment deteriorated sharply last month due to sluggish demand and a severe cash crunch in the inter-bank market and a sub-50 result will likely place some negative pressure for base metals prices early next week," it said.


Copper, after an early sub-$6,700 foray, moved higher to trade at $6,762 per tonne, a $22 advance from the Thursday close. Warehouse inventories fell for the fourth day in a row - down a net 1,650 tonnes at 665,775 tonnes.

Aluminium, as low as $1,758 in the previous session, was trading at $1,770.50, up $6. Stocks fell 6,875 tonnes to 5,435,600 tonnes. But cancelled warrants - metal booked for removal and now in queues - jumped to an all-time high of 2,256,400 tonnes, with 28,525 tonnes warranted in Detroit.

In others, zinc drifted to $1,845, a $5 loss - stocks rose from five-week lows after a 3,775-tonnes increase to 1,061,475 tonnes. Lead traded at $2,053, up $1, with stocks rising a modest 300 tonnes to 198,300 tonnes.

Nickel business at $13,830 was a slight $25 lower. Stocks were down 156 tonnes at 187,488 tonnes. Tin traded at $19,779, virtually unchanged from Thursday's $19,770 close, while stocks climbed 150 tonnes to 14,320 tonnes.

Steel billet was indicated at $140/210; stocks were static at 74,880 tonnes. Cobalt traded at $31,500, equalling its highest since September 2012, although stocks rose 11 tonnes to 458 tonnes, a two-and-a-half-month peak. Molybdenum was neglected.

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