LME MORNING - Metal tumble to multi-month lows, commodities suffer in continued cross-asset washout

By: Eddie van der Walt

London 15/04/2013 - Base metals continued to tumble in Monday's LME premarket, with most setting new multi-month lows in heavy trading after weak Chinese numbers added to the global economic malaise.

Copper fell to its lowest in more than a year and aluminium set a three-year low as commodities sold off across the board on robust volumes.

"The continuing downward trend in metals seems to be driven by weakening sentiment... global growth still faces many headwinds," FastMarkets analyst William Adams said.

"The oversupply is potentially a major issue that could come to plague the market if traders, banks, producers and warehouses lose their grip on keeping surplus metal off market," he added.

In other commodities, spot gold tumbled to its lowest price in more than two years at $1,385.55 per ounce. The metal is now officially in a bear market, having lost more than 20 percent since its peak at $1,921.10 in September 2011.

Brent crude oil, meanwhile, dipped to its lowest since July at $100.58 per barrel following last week's demand forecast downgrade by the Energy Information Administration.

Surprisingly soft Chinese numbers out over the weekend have weighed. The country's first-quarter GDP growth of 7.7 percent was down from 7.9 percent in the last quarter of 2013.

March fixed asset investment - which shows the change in total spending on non-rural capital investment - at 20.9 is down from 21.2, while industrial production at 8.9 percent was down from 9.9 percent.

"The [Chinese] growth slowdown is partially related to the weaker-than-expected industrial production in March," broker Credit Suisse said. "The room for upside surprises to China’s 2013 growth outlook is limited due to the implementation of macro-prudential measures, structural headwinds and a moderate global recovery."

But the weakness in the first quarter may have been related to the surge in capital goods imports, which suggest some scope for growth to rebound if investment activity from corporations picks up, it added.

In currencies, the euro was last down more than a third of a cent against the dollar, falling to at 1.306. Equities are also firmly lower - In Europe, the FTSE 100 is down 1.2 percent and the DAX was down 1.1 percent at 7,659, while in Asia the Nikkei is down 1.5 percent and the Hang Seng is down 1.4 percent.


Copper fell to its lowest since October 2011 at $7,085, with nearly 27,000 lots traded on Select as of 11:30 BST.

The metal was last at $7,166.50 per tonne, down $239.75. Stocks rose a net 17,525 tonnes to 611,175 tonnes, the highest since September 2003. The bulk was delivered into Johor at 19,600 tonnes. Cancelled warrants fell 1,700 tonnes to 156,650.

"Copper is falling because of bearish sentiment across commodities," FastMarkets analyst James Moore said. "Some big volumes are passing through the market and, with index rolls upon us, the aggressive rout in gold will have a knock-on effect."

Aluminium fell to $1,818 in earlier trading - its lowest since October 2009 - and was last at $1,836.50, down $15.50. Inventories fell 2,425 tonnes to 5,192,325, with Detroit shedding 3,550 tonnes and Baltimore 1,625 tonnes. Cancelled warrants rose 3,350 tonnes to 2,033,550 tonnes.

Zinc was last at $1,842, down $32 or nearly two percent. Stocks dropped 4,575 tonnes to 1,131,475 but cancelled warrants slipped 6,500 tonnes to 650,350 tonnes. Sister metal lead fell $39 to $2,010 even after stocks fell 350 tonnes to 259,025 tonnes.

Tin at $21,100 was down $1,105, with stocks down 75 tonnes at 14,405 and cancelled warrants 75 tonnes lower at 2,915 tonnes. Nickel fell $425 to $15,425 - inventories dropped 624 tonnes to 168,762 tonnes.

Steel billet is neglected, with stocks unchanged, and in the minor metals cobalt was indicated at $25,500/26,500, with stocks falling 15 tonnes to 446 and cancelled warrants down the same amount at 168 tonnes. Molybdenum was also neglected.

(Editing by Mark Shaw)