LME MORNING - Base metals prices tick higher on increased optimism, market quiet ahead of US jobs data

By: Kathleen Retourne

London 01/02/2013 - Base metals were higher in Friday's LME premarket, supported by positive data out of the eurozone and China as well as the continued strength on the euro - last at 1.3675 against the dollar, its highest since November 2011.

Still, many metal market participants are likely to stick to the sidelines this morning, holding fire ahead of closely watched US data due for release later.

“Activity is at a minimum this morning whilst we wait the important numbers from the US this afternoon,” a trader said. “The data we have already seen today is moderately bullish for the most part, continuing the theme of recent weeks. Prices are probably due a pullback to consolidate recent gains as some are approaching overbought territory.”

The blockbuster US non-farm payrolls data for January is expected to show that 161,000 new jobs were created in the US. October, November and December provided solid reads, with US unemployment now at 7.8 percent.

This will be followed by the University of Michigan's consumer sentiment index, which is expected at 71.4, and the ISM manufacturing PMI, which is forecast at 50.8.

The January Chinese manufacturing PMI - released earlier this morning - disappointed at 50.4, below the bullish forecast of 51.1 and a slight drop from 50.6 in December

But the comparative HSBC number at 52.3 reading improved on the earlier 51.9 flash reading for January, blunting the impact of the other PMI reading.

"The market seems to be siding with the HSBC number," FastMarkets analyst William Adams said.

In Europe, January manufacturing PMIs have also been released, with Spain and Italy surprising to the upside: Spain at 46.1 and Italy at 47.9. Italian unemployment also ticked lower to 11.1 percent.

“Today is likely to be a choppy and nervous day given all the data releases. The base metals are well placed to build on the breakouts seen in copper and nickel earlier in the week,” Adams said


Copper was last at $8,210 per tonne, up $45 on the previous day’s close. Inventories rose a net 325 tonnes to 371,750 tonnes and cancelled warrants - metal booked for removal - at 36,750 tonnes dipped 1,850 tonnes.

“So far, market players have been ignoring the increase in stocks, this clearly being overshadowed by the positive economic outlook and the growing risks to supply,” Commerzbank said.

Aluminium gained $10 to $2,100 - although stocks fell 1,675 tonnes to 5,155,300 tonnes, cancelled warrants declined 9,125 tonnes to 2,049,875.

Lead was up $15 at $2,446 after inventories and cancelled warrants both dipped 725 tonnes to 290,125 tonnes and 155,625 tonnes respectively.

Zinc was just $10 higher at $2,156 - stocks and cancelled warrants both fell 3,450 tonnes to 1,205,275 tonnes and 667,675 tonnes respectively.

Nickel was up $180 at $18,530. Stocks rose 888 tonnes at 150,900 tonnes but cancelled warrants jumped 2,244 tonnes at 24,294 tonnes due to increases in Antwerp, Johor and Rotterdam.

Although the complex has pulled back from the January highs, the metals ended the month four percent higher on average, led by a 7.4-percent surge in nickel prices.

“[But] we are sceptical whether nickel can hold onto its $1,000-rally of the past week, and suspect nickel may follow the course set by copper of easing back from multi-week peak,” ANZ Commodity said.

Tin was last at $24,825, up $75. Inventories were at their highest since June 1, increasing 205 tonnes to 13,625 tonnes, predominantly due to increases in Johor. Cancelled warrants fell 140 tonnes at 3,075 tonnes.

Steel was last at $316/340, while in the minors cobalt was quoted at $24,500/26,500 and molybdenum was neglected.

(Editing by Mark Shaw)