London 20/11/2012 - Base metals were ranging at mostly lower levels during Tuesday LME premarket trading, correcting back modestly after Monday's advances, traders said.
Underlying sentiment in the complex improved on Monday due to macroeconomic developments, which suggests that there is potential in the short term for further advances and a pick-up in risk appetite.
"It is consolidating but it does look a bit perkier after the upside break in copper yesterday," a trader said.
Copper settled below $7,800 per tonne and two-week highs hit on Monday, while aluminium, although off its best after warehouse inventories soared to all-time highs, held relatively steady.
In other markets, the euro was not far off its strongest since early November. The single currency, as high as 1.2820 against the dollar on Monday, stood around 1.2810.
The metals complex took some confidence from the US budgetary fiscal cliff discussions, which began on Friday and appear to have got off to a constructive start, traders said.
Republicans controlling the US House of Representatives showed a willingness to compromise with President Obama on developing a new budget framework to replace the fiscal cliff, a slate of more than $600 billion in spending cuts and new taxes that could tip the US economy back into recession.
As well, positive metals-sensitive US data on Monday also underpinned sentiment, as October existing home sales and the NAHB housing market index for November both beat expectations. Further metals-sensitive October US building permits and housing starts figures are out this afternoon.
Today's trends are also expected to be influenced by the eurogroup meeting in Brussels, where the terms of the Greek bailout are expected to be discussed - newsflow from here is likely to direct sentiment. There are hopes that a deal to approve the next tranche of loan monies to Greece will be signed.
ALUMINIUM INVENTORIES HIT RECORD HIGH
Aluminium was trading at $1,978 per tonne, up $1 still, although off its $1,989 peak. Inventories rose a net 65,200 tonnes to an all-time high 5,172,500 tonnes, exceeding the previous record set in February. This was due to a massive 59,725-tonne warranting in Detroit, where stocks now stand at 1,461,825 tonnes.
Copper was ranging below $7,800 after peaking on Monday at its strongest since November 7 at $7,806.25. Recent business at $7,761 was a $42 loss from the kerb close. Stocks were down 350 tonnes at 253,700 tonnes.
"[It] looks like we'll see higher numbers according to the charts. The weekly shows a continuation pattern emerging," another trader said.
Zinc was $9 lower at $1,936.50. Inventories inched up 400 tonnes to a new high since January 1995 of 1,177,075 tonnes. Lead traded at $2,179, down $12. Warehouse stocks dropped 2,575 tonnes from what had been four-month highs to 336,425 tonnes.
Nickel pared gains, trading at $16,450, up $25 - stocks rose 1,278 tonnes to 133,914 tonnes, the highest again since February 2011. Tin business at $20,785 was $15 lower - inventories were up 75 tonnes at 11,530 tonnes.
Steel billet was indicated at a wide $332.50/345.00, while the inventory downtrend resumed - stocks dropped 2,080 tonnes to 87,100 tonnes. Cobalt was indicated at $22,500/27,450, while molybdenum was neglected, although inventories rose 24 tonnes to a two-month high of 144 tonnes.
(Editing by Mark Shaw)