LME MORNING - Base metals stumble on soft EU PMIs, copper little changed

By: Martin Hayes

London 21/03/2013 -  Base metals fell back from the peaks reached earlier in Asia during Thursday LME pr-market trading - the technical surge that started in the previous session petered out, following sluggish equity markets and soft EU PMI data this morning.

The French, German and overall EU PMIs all came in below expectations at 43.9, 48.9 and 46.6, all below the 50 level that divides expansion from contraction, which tarnished the boost provided earlier by the positive Chinese reading.

Late on Wednesday, the US FOMC monetary policy meeting concluded without any surprises but the focus of financial market attention and direction remains the eurozone and Cyprus and the implication of the Cypriot parliament rejecting the contentious banking debt bailout deal.

"The situation remains clouded, so expect further volatility as the ECB and Cyprus go back to the drawing board with the ECB deciding on the next move," LME RDM Sucden said.

The euro was drifting as well, trading around 1.2905 against the dollar but still holding above the four-week lows of 1.2841 set two days ago.

In Asia earlier, prices forged higher after China's HSBC flash manufacturing PMI for March came in at 51.7, above the forecast of 51.2 and a strong improvement from the holiday-affected reading of 50.4 in February.

"Having sold off in recent weeks and days, it looks as though the metals’ corrections may well have run their course for now and the lower prices may now attract bargain hunting," William Adams of FastMarkets said.

Late on Wednesday, the FOMC kept the target range for the Federal funds rate at 0-0.25 percent, and, as expected, maintained that exceptionally low interest rates will be appropriate for as long as the unemployment rate remains above 6.5 percent.

"We would call these markets as broadly range-bound until at least the next 'black swan' event emerges," Sucden added.

Other data releases scheduled for Thursday include the US March PMI, the January US HPI, the February US CB leading index and existing home sales figures, the March Philly Fed Manufacturing Index and weekly US unemployment claims.


Copper was recovering from the sub-$7,500 seven-month lows set earlier in the week, trading as high as $7,750 per tonne before dropping back to $7,626, up just $6 now.

Warehouse stocks rose for the 26th day in a row, up a net 6,625 tonnes at 554,450 tonnes, the highest now since February 2010. The increase reflected warrantings in Johor and New Orleans.

Aluminium was trading at $1,943, up just $4, likewise off its high of $1,958. Inventories jumped 12,400 tonnes to 5,229,825 tonnes, the highest for three months, with 19,850 tonnes warranted in Vlissingen.

In others, lead was $12 higher at $2,200. Stocks dropped for the 11th successive day, with the 1,500-tonne decline taking the total down to 269,975 tonnes, a fresh low since October 2012. Zinc was $10 higher at $1,941, with stocks falling 3,900 tonnes to 1,195,825 tonnes.

Nickel business at $16,856 was $46 higher, while stocks dropped 18 tonnes to 162,288 tonnes. Tin was unchanged at $22,600 - there was a 95-tonne stock fall to 14,050 tonnes.

Steel billet was offered at $300, with stocks unchanged for the 49th day in a row at 83,070 tonnes. In the minors cobalt traded at an unchanged $25,000 - there was a flurry of business at this level - with stocks falling two tonnes to 427 tonnes. Molybdenum was offered at $26,500.

(Editing by Mark Shaw)