London 07/03/2013 - Base metals were generally trading close to their previous closing levels during Thursday’s LME premarket, having managed earlier to stave off fresh downside swings in all bar lead.
Traders said a cautious mood prevailed ahead of today's monetary policy meetings in Europe and Friday's keynote US jobs report, while continued strength in equities and a pick-up in the euro only provided peripheral support from the current downtrend.
"The positive correlation between commodity prices and equities that has been observed in the past does not apply at present. Clearly, disappointed investors are currently switching from commodities to equities and thereby reinforcing this trend," broker Commerzbank said.
European stock markets were hovering around multi-year highs hit in the previous day when the Dow Jones also set fresh record highs in the US. The euro was firmer against the US dollar around 1.3030, having bounced back from Wednesday's late three-month low of 1.2962.
Wider market attention today swings towards the European Central Bank (ECB), which is seen holding its interest rates at a record low of 0.75 percent. The Bank of England, which has made headlines recently about a possible move towards negative rates, is also expected to make no major changes today on both rate and liquidity levels.
Earlier today the Bank of Japan rejected a call for more aggressive monetary easing and kept its asset-purchase fund unchanged at 76 trillion yen. Overnight, the Federal Reserve released its Beige Book in which it continued to describe growth across the country as "modest to moderate".
On the data side this afternoon, February US Challenger Job Cuts, the January US trade balance, fourth-quarter US revised non-farm productivity and unit labour costs, January US consumer credit figures and weekly US unemployment claims will all be released.
COPPER BACK ABOVE $7,700 BUT INVENTORIES HIGHEST FOR NEARLY THREE YEARS
Copper settled into the middle of a tight range and traded back from its earlier highs, with business at $7,724 still up $30 from Wednesday's kerb close. So far prices have held above the $7,700 level, avoiding a retest of last week's three-and-a-half month low of $7,652.
"With no obvious support before $7,600 and even $7,500 it makes sense why prices remain at this stage very susceptible toward the downside," LME RDM Sucden said.
As well, the inventory uptrend continued, with the 16th successive daily increase lifting the total to its highest since May 2010. Stocks were up a net 7,475 tonnes at 481,225 tonnes, due to warrantings of 3,550 tonnes and 4,025 tonnes in Johor and New Orleans respectively.
Aluminium was holding above Tuesday's three-and-a-half month low of $1,948.50, trading at $1,965, a $12 advance. Inventories, however, jumped to a two-month high of 5,197,450 tonnes after a 9,525-tonne increase. This was due to an 18,900-tonne warranting in Vlissingen. This location now holds 1,631,025 tonnes, with 830,125 tonnes under cancelled warrant - booked for removal.
In others, lead touched a fresh low for the current downcycle at $2,179.50 before trading at $2,189, down $3. Inventories were down 1,550 tonnes at 286,150 tonnes. Zinc was $7 lower at $1,981, with inventories falling 2,775 tonnes from yesterday's one-month highs to 1,198,025 tonnes.
Nickel was up $47 at $16,572. There was a modest 60-tonne fall in stocks to 160,962 tonnes - on Wednesday they had hit three-year highs. Tin was $30 higher at $23,500, while stocks rose 40 tonnes to 13,520 tonnes.
Steel billet was neglected and inventories were unchanged at 83,070 tonnes for the 39th day in a row. Cobalt was quoted at $25,050/25,750 while molybdenum was ignored.
(Additional reporting by Perrine Faye, editing by Mark Shaw)