London 01/10/2013 - Base metals ranged lower during Tuesday LME premarket trading, with low turnover and the unsettled US government budget impasse partly offset by the influence of a firm euro, traders said.
The US currency fell to an eight-month low of 1.3588 against the euro at one stage and was recently struggling around 1.3560.
Still, a combination of caution over the US budget impasse and this week's Chinese Golden Week holidays - markets there are now closed until next week - made for low-key volumes and limited movement. The lack of momentum generators is expected to see the current broad short-term sideways pattern continue.
"Technical considerations are likely to be the main market drivers here. Generally, the technicals are looking fairly positive, and so prices will probably lift marginally, albeit inside their well-established ranges," LME RDM Sucden said.
"We would, however, not get too comfortable with the rallies as we would expect scale-up producer selling to cap rallies around recent resistance levels," William Adams of FastMarkets said.
In the US, Republicans and Democrats failed to agree a 2013-2014 budget overnight, forcing all non-essential government services to close. Hundreds of thousands of workers must take unpaid leave until a compromise can be reached, a process that could take weeks, threatening the country’s fragile economic recovery.
Today, the US figures that are due include the manufacturing PMI and data on auto sales. So far, China's official PMI has come in at 51.1 against a forecast 51.6, while in Europe, the Spanish and Italian PMIs were below par at 50.7 and 50.8 respectively. The eurozone PMI was the expected 51.1.
In the metals, copper neared the one-week highs of $7,330 hit yesterday and then backtracked to $7,270, a $32 loss. Inventories fell for the 19th day in a row - down a net 4,700 tonnes at 533,325 tonnes, the lowest since mid-March again.
In nearby spreads, cash/October, which traded out to $4.25 backwardation on Monday, was trading at $3.50. 'TOM/next' traded recently at $0.40 backwardation.
Zinc raced to a one-month high of $1,935.25 at one stage and then fell away to $1,907, an $11 loss. Declines were hastened by a hefty stock increase - these jumped 57,600 tonnes to 1,024,025 tonnes. This was a one-month high and reflected a 60,675-tonne warranting in New Orleans.
In others, aluminium equalled the one-month best of $1,860 hit on Monday before moving back to $1,843, a $2 loss. Stocks were down 6,450 tonnes at 5,374,550 tonnes. Lead at $2,087 was down $30, although inventories fell 500 tonnes to 239,350 tonnes.
Tin dipped to $23,155, down $195 from yesterday, when prices hit six-and-a-half month highs of $23,500. Stocks were down 175 tonnes at an eight-month low of 13,240 tonnes, while cancelled warrants soared 44 percent to 3,020 tonnes.
Nickel was $79 lower at $13,876 - stocks jumped 936 tonnes to all-time highs of 227,004 tonnes.
Steel billet was neglected but stocks fell 2,015 tonnes to 27,885 tonnes, the lowest since June 2010. Cobalt and molybdenum were also ignored, although stocks of the former fell five tonnes to a one-month low of 534 tonnes.
(Editing by Mark Shaw)