LME MORNING - Copper charges to four month highs, firm euro supports ahead iof US jobs data

By: Martin Hayes

London 07/09/2012 - Base metals pushed higher throughout Friday LME pre-market trading, with short-term sentiment having been boosted by Thursday's ECB bond-buying announcement, which although widely factored in, has defused the eurozone sovereign debt crisis for now.

Copper led the way, charging above $7,800 per tonne and trigging investment buy-stops to hit a four-month high. In other metals, aluminium set a new two-month peak and zinc its highest for three months.

Today as well in China, further stimulus of a trillion yuan ($155 billion) worth of infrastructure projects was announced, which further boosted the mood.

Trends in wider markets were robust, with equities all rising, while the euro moved to a new two-month high around 1.2686 against the dollar. For now, the crisis surrounding eurozone debt has been defused and the threat of a deep economic slowdown has been deferred, traders added.

"The steps will surely have shorts far more nervous than any longs," a trader said.

On Thursday, financial markets were galvanised when the European Central Bank announced a potentially unlimited bond purchase plan to reduce borrowing costs of debt-laden eurozone nations, such as Spain and Italy. However, there are still deep-lasting problems in the eurozone, while other global economies continue to give cause for concern.

"We are friendly to the metals but 'caution-buyers', as the market seems to have gotten ahead of itself in the wake of poor Chinese data and the pending US non-farm payrolls," broker RBC said.

The key August US employment report will be issued in early-afternoon, with 123,000 jobs expected to have been created last month.

"We would think any number sub-110,000 could see a rash of selling across financial markets. Any number plus -130,000-150,000 will most likely see initial buying, but in the end just manage to justify current prices," RBC added.

Attention will then swing to the weekend, when China is set to release a slew of macroeconomic data including the August CPI and PPI on Saturday; August figures on industrial production, retail sales and fixed asset investment on Sunday; and possibly continuing Monday morning with August trade data. 


Copper broke conclusively above the $7,800 per tonne level to hit $7,880, the highest since May 14, then held at $7,850, up $149 or 1.9 percent. Stocks rose a net 2,725 tonnes to 215,950 tonnes, due to a 6,225-tonne warranting in Busan.

Aluminium peaked at $1,998, the highest since June 11, then traded at $1,993, up $18. The market paid no heed to a 5,025-tonne stock jump to 4,871,425 tonnes, which reflected a 12,175-tonne warranting in Vlissingen. Sept/Oct traded at $14 and $13 backwardation.

In other metals zinc reached $1,943.50, the strongest since June 11, then settled at $1,935, up $27 - stocks fell 3,050 tonnes to 942,200 tonnes. Lead was up $16 at $2,064, while the 1,300-tonne stock drop brought the total down to 303,450 tonnes, the lowest since April 2011.

Nickel traded at $16,360, up $300, while inventories dropped 72 tonnes to 121,080 tonnes. Tin was up $195 at $19,920 - there was a modest five-tonne increase in stocks.

Steel billet traded at $345, up $5, cobalt was steady at $29,000/30,000, while molydbenum was neglected.

(Editing by x)