London 25/04/2013 - Base metals stepped back from their early highs during Thursday LME premarket trading when the continuation of the complex's technical correction paused for breath against a generally sluggish economic backdrop, traders said.
But prices were still broadly steady, while copper, which has seen a five-percent rally from its early-week 18-month lows, was firmer. Further pockets of technical buying are possible, which should help reduce selling pressure in the immediate term.
"We have viewed the sell-offs, especially in copper, nickel and gold, as being oversold so are not surprised that these metals are rebounding strongly," William Adams of FastMarkets said.
The advances that kicked off on Wednesday took place against a broader correction throughout the commodity sector - gold at around $1,445 per ounce was building on its recovery from last week's massive sell-off and crude oil was stable just below $102 per barrel.
But he industrial materials may struggle to generate eventual follow-through given the sluggish macroeconomic picture, traders said.
Nevertheless, copper was upbeat after yesterday's positive close above $7,000 per tonne, challenging $7,100 at one stage. And while trends in other metals were more mixed, price levels were still above recent sell-off lows.
"We now have a bottom - temporary - in place and we hope the markets can take stock and consolidate over the next few days. We do feel, however, that numbers out of China need to improve," LME RDM Sucden said.
As well as China, where recent manufacturing data was downbeat, data from Europe and the US has been equally uninspiring - Wednesday's US durable goods orders, a key leading indicator, were lower.
This has raised hopes that central banks will provide yet more monetary stimulus, including a widely mooted rate cut by the European Central Bank next week and an extended duration of the US Federal Reserve's quantitative easing programme. The FOMC meets next week as well.
The front-line economic calendar is light today - regular weekly US unemployment claims are scheduled - so this may allow the metals to further benefit from technical consolidation.
The bounce may be short-lived, however, with investment funds running large profitable short positions that are unlikely to be covered at current price levels. Rallies may be seen as an opportunity to add to these positions.
COPPER HOLDING ABOVE $7,000/T
Copper traded as high as $7,101 per tonne and then settled at $7,070, up $40.50 from the Wednesday close, holding comfortably above $7,000 after rallying from 18-month lows of $6,762.
Warehouse inventories fell a net 1,900 tonnes to 681,475 tonnes, while cancelled warrants - metal booked for removal - rose to a new record of 168,200 tonnes.
Aluminium was trading at $1,922, up $11, with inventories falling a chunky 8,075 tonnes to 5,159,000 tonnes.
In others, zinc drifted $1 lower to $1,918, averting a test of $1,900 again, with stocks falling 6,000 tonnes to 1,086,550 tonnes. Sister metal lead was $9 higher at $2,054 - inventories were down 350 tonnes at 258,450 tonnes, a fresh low since October 2012.
Nickel was $40 lower at $15,230 - inventories were down 96 tonnes at 175,764 tonnes from what were all-time highs. Tin was unchanged at $20,900, while stocks were down 125 tonnes at 14,120 tonnes.
Steel billet was neglected and stocks were unchanged at 77,480 tonnes. In the minors cobalt was indicated at $26,500/27,500 and molybdenum at $24,500/36,500.
(Editing by Mark Shaw)