London 20/04/2012 - Base metals were stuck around yesterday’s closing levels in Friday morning LME trading, nervously succumbing to relentless eurozone concerns
Markets were given a slight boost by German lfo business climate data. This came in at 109.9 against an expected 109.6, lifting the euro slightly to 1.3166 against the dollar, but overall sentiment remains subdued.
Eurozone bonds are increasingly under scrutiny. German 10-year bond yields hit a record low on Friday of 1.597 percent, while Spanish bonds broke above six percent. French bonds have come under pressure ahead of the first round of French presidential elections on Sunday - 10-year yields were up at 3.13 percent.
“With increasing focus on the French presidential election, and fading interest rate support, the euro remains at risk of a test of the key 1.30 support in the near term,” Credit Suisse said.
There is potential for business and price fluctuations to become more volatile after the weekend as end-of-the-month booksquaring and 'window-dressing' activity emerges.
Expectations of an imminent new round of monetary easing in China after last week's disappointing first-quarter GDP data could stimulate buying interest in metals, although not everyone is confident that Beijing will take such steps
“We do not anticipate any quantitative easing of monetary policy in China, especially since the country’s economy is moving in the direction of the target set by the government, and expect ‘only’ that the reserve requirement ratio for banks will be reduced by 50 basis points in the current quarter. Thus metals would lack support from this side,” Commerzbank said.
MOST METALS MARGINALLY HIGHER
Copper has inched higher to $8,067.25 per tonne, up $17.25 on Thursday’s close. After two days of increases, copper stocks fell a net 1,550 tonnes to 261,150 tonnes mostly on falls in US warehouses - inventories fell 1,825 tonnes in New Orleans.
Europe and Asia saw increases, with Gwangyang up 7,650 tonnes and Leghorn up 500 tonnes. Cancelled warrants at 62,125 tonnes rose 4,800 tonnes - including 2,675 tonnes at Incheon in South Korea and 1,825 tonnes in New Orleans.
“Technical selling in copper has abated in the past few days, but we think another push lower will bring the technical players back to the market to add to shorts. A test of chart support at $7,500 is highly likely if that does happen,” RBC Capital Markets said. "We doubt the big shorts will cover before that unless the SHFE/LME arbitrage window opens again."
Aluminium gained a mere $3 to $2,076. Inventories were down for the third consecutive day, falling 3,650 tonnes to 5,058,475 tonnes, with only Busan reporting any stock increases - rising 7,600 tonnes to 60,650 tonnes. Cancelled warrants at 1,670,500 tonnes were down 11,000 tonnes.
Lead at $2,088 was up $8, while stocks were down 1,050 tonnes to 369,150 tonnes and cancelled warrants at 32,575 tonnes were up 5,600 tonnes, with metal booked for removal at Port Klang up 6,650 tonnes at 13,550 tonnes.
Zinc at $2,007 rose $7 after stocks fell 925 tonnes to 910,900 tonnes and cancelled warrants saw dropped 800 tonnes to 15,550 tonnes.
Nickel was the strongest performer, up $107 at $17,707. Inventories at 100,080 tonnes were up 318 tonnes and cancelled warrants fell 228 tonnes to 4,074 tonnes.
Tin was the worst performer and the only metal still in negative territory at $21,250, down $125. Stocks were up 165 tonnes to 13,645 tonnes - the highest since November 17 - although cancelled warrants at 1,005 tonnes were up 105 tonnes.
Steel was quoted at a slightly softer $500/511 after inventories rose 325 tonnes to 30,485 tonnes. In the minor metals, cobalt was indicated at $30,000/30,750 and molybdenum at 30,500/32,000.
(Additional reporting by Clara Denina, Editing by Mark Shaw)