LME MORNING - Copper leads base metals lower amid EU worries

By: Eddie van der Walt

London 26/09/2012 - Base metals edged lower in premarket trading on the LME on Wednesday, with copper losing about one percent as fears over the stability of the eurozone continue to weigh on investors' sentiment.

Spanish Prime Minister Mariano Rajoy yesterday said he was seeking a rescue package but only if his country's bond rates drifted too high for too long.

This country also faces a de facto Catalan call for a vote on independence, while, elsewhere, the German Bundesbank is causing concern with its anticipated challenge against the European Central Bank's (ECB) bond buying plans.

But there is still potential for further gains, FastMarkets analyst William Adams said. "We would not be surprised if base metals remain well supported now - at least for a while and judging by the charts there may well be more room on the upside too," he said.

In data, Italian retail sales dipped 0.2 percent during July, compared with an increase in June. A credit conditions survey from the Bank of England showed that secured credit to households increased 'significantly' in the three months to September, while unsecured credit remained unchanged.

Yesterday, positive data from the US on consumer confidence and manufacturing supported prices. But comments from the president of the Federal Reserve Bank of Philadelphia, Charles Plosser, dampened the mood. The US was unlikely to see much benefit to growth or employment as a result of a recently announced third round of quantitative easing, he said, warning also that the the Federal Reserve's credibility could be damaged.

In other markets, equities were also lower, with the FTSE 100 losing about 1 percent to 5,796. The Dax lost about 1.4 percent, or 100 points, to 7,324. Currencies see the euro lower against the dollar, last at 1.2868, down $0.0032, with the dollar index at 79.80, up 0.13.

In other commodities, gold is up, gaining 64 cents to $1,762.28 per ounce, but oil was also down, losing 32 cents to $109.56.

COPPER DOWN ONE PERCENT, LEAD STOCKS FALL FURTHER

Copper was last down $82.75 or more than one percent at $8,192.25 per tonne. As of 10:45 BST, about 5,300 lots have traded on Select. Stocks rose a net 225 tonnes to 220,525 tonnes while cancelled warrants were 1,000 tonnes lower at 39,425.

Aluminium also lost ground. It was last at $2,089, down $16 on the close. Aluminium inventories, however, declined for the third consecutive time, this time by 8,925 tonnes to 5,701,800 tonnes. There was a net outflow of 3,000 tonnes each at Vlissingen and Detroit - the minimum load-out rate required by LME rules for these two locations - while 2,500 tonnes left New Orleans. Rotterdam, on the other hand, received 3,000 tonnes. Cancelled warrants fell 11,925 tonnes to 1,607,000 tonnes, reflecting the re-warranting of some stocks in the queue following the recent backwardation.

Lead was last at $2,302.75 per tonne, down $17.25 on the close. Stocks continue to plummet - today’s drop of 3,425 tonnes takes the total to 274,175 tonnes. Inventories have fallen more than 100,000 tonnes since February. Cancelled warrants at 89,175 tonnes are 3,425 tonnes lower.

Zinc also lost ground, it was last at $2,116 per tonne, down $20, despite a stock decrease of 1,650, taking total warehouse material to 122,422 tonnes. The largest outflow occurred in New Orleans, where 1,475 left the sheds. Cancelled warrants, at 362,175 are 1,650 lower.

Nickel stocks are unchanged at 122,422 tonnes, with Johor both receiving and releasing 852 tonnes. Cancelled warrants decreased by 18 tonnes to 16,926. The metal was last at $28,392, down $8.

Tin decreased by $21,098 to $352. Stocks increased by 100 to 12,155 tonnes, with Johor receiving the balance. Cancelled warrants are 515 tonnes lower at 6,865.

So far, 11 contracts of steel billet traded, the last at $377, taking the price down $3 but still holding above last week's 39-month low of $325. Cobalt was last quoted at $27,300/29,500. Molybdenum was neglected.

(Editing by Perrine Faye)

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