LME MORNING - Base metals rally restarts after brief pause, unfazed by eurozone fears

By: Kathleen Retourne

London 27/01/2012 - Base metals pushed higher still in Friday morning trading, impervious to a short run of poor economic data. The euro was also resilient, holding around 1.3144 against the dollar.

EU data came in worse than expected today, with money supply for December at 1.6 percent against a forecast 2.2 percent. Private loans for December were also down at 1.0 percent against a forecast 1.7 percent. Earlier, the Spanish unemployment rate was as its worst for 15 years at 22.9 percent

Greece’s debt swap talks are is the focus in the eurozone - a solution to the country’s debt crisis remains elusive.

Prices dipped briefly on the poor EU data and some profit-taking but the bias is generally to the upside this morning.

Monday will see the return of China to the market after a week-long absence for Lunar New Year celebrations and with it some indication to the country's strength of demand and restocking intentions.

“We have stated previously that we thought it unlikely the Chinese would be eager buyer of copper if the price starts with an eight, but rumours have started to circulate in the market about Chinese shorts,” RBC said. "If true, it may be a case of being forced to cover losing positions."

The US will publish fourth-quarter GDP figures later today, which could provide more lift to the market should they beat forecasts.


Copper is back above $8,600 - at $8,645 per tonne recently, it was up $55 on the previous day’s close. Stocks fell for the 18th consecutive day to at 335,425 tonnes, down a net 2,450 tonnes.

Cancelled warrants jumped 8,975 tonnes to 90,425 tonnes, with 59,525 tonnes cancelled in New Orleans. St Louis, one of the few warehouses without a queue, is responsible for 10,500 tonnes of cancelled warrants.

Aluminium inventories edged back below 5 million tonnes, dropping 3,500 tonnes to 4,996,650 tonnes, while cancelled warrants at 968,750 tonnes were down 3,450 tonnes. Prices at $2,284 were up $5.

Tin was up $395 at $24,400 - it has climbed 27 percent since the start of the year - and peaked earlier at $24,495, its highest since September 8. Stocks were down 300 tonnes to 9,365 tonnes, while cancelled warrants at 1,890 tonnes were down 300 tonnes.

"This extremely sharp price rise as compared to other metals is no doubt due to the nature of the tin market – being the smallest and most illiquid metal market of all, even small-scale buying can generate a major impact,” Commerzbank said.

Nickel at $21,620 was up $20 despite stocks rising for the fifth day in a row, up 564 tonnes to 95,016 tonnes. Cancelled warrants were up 150 tonnes to 3,762 tonnes.

Lead inventories declined 1,475 tonnes to 343,050 tonnes, with prices unchanged from yesterday at $2,325. Zinc stocks were also down, dropping to 848,350 tonnes, a 150-tonne loss, while business at $2,195 was down $10.

(Editing by Mark Shaw)