LME MORNING - Base metal really runs out of puff on softer euro and lack of interest

By: Kathleen Retourne

London 23/07/2013 - Base metals drifted back from the previous day’s highs during Tuesday LME pre-m arket trading as the euro lost ground and lack of interest failed to sustain the rally.  

“Prices have rebounded well to the upside but resistance levels are keeping gains in check for now,” a trader said.  “Positive data may encourage prices through these levels, but lack of interest in the summer months will probably prompt range-trading for now.”

“Metal prices are taking a breather this morning following the significant gains they achieved yesterday, and are mostly falling,” added Commerzbank. “So far, they are not even finding support from very firm Chinese equity markets and media reports quoting Chinese Prime Minister Keqiang as saying that the government will not tolerate any growth below seven percent.”

In other markets the euro, whose strength on Monday underpinned metal prices on the upside, was also taking a breather. The currency, which hit its highest since June 21 at 1.3218 yesterday, was trading around a stable 1.3185 against the dollar this morning.

On the data front, the market shrugged off yesterday's disappointing US June existing home sales figures - which at 5.08 million were below the forecast of 5.27 million and the May reading of 5.14 million - amid renewed confidence that the Fed will prolong its $85 billion per month bond-buying programme until there is a decisive recovery in the US economy.

Attention now is focussed on the global PMIs on Wednesday - China's HSBC PMI will be released, to be progressively followed by French, German, eurozone and US readings. This week ends with figures on US consumer confidence, but before that Tuesday's releases include include the May US HPI, the June eurozone Consumer Confidence index and the July US Richmond Manufacturing Index.

Today’s data calendar is light, with only EU consumer confidence and Richmond manufacturing index numbers likely to have any influence.

COPPER OFF ONE-MONTH HIGHS

Copper, which hit a one-month high yesterday, was last at $6,989 per tonne, down $40 on the previous day’s close. Meanwhile, inventories were down for the fifth consecutive day, falling a net 2,600 tonnes to 632,050 tonnes. Cancelled warrants were also lower at 323,625 tonnes a 3,375-tonne loss.

Aluminium was marginally higher, up $3 at $1,850, although stocks were down 2,650 tonnes at 5,466,500 tonnes. Cancelled warrants dropped 7,500 tonnes to 2,139,825 tonnes.  

Nickel was down $13 to $14,057. Stocks hit a fresh all-time high of 200,334 tonnes after a 552-tonne increase, 456 tonnes of which went into Port Klang, Malaysia.

Lead was last at $2,047 a $6 decline while stocks rose 800 tonnes to 198,775 tonnes and cancelled warrants were unchanged at 108,075 tonnes. Sister metal zinc at $1,871 was $6 lower, it saw both stocks and cancelled warrants decline 3,800 tonnes to 1,063,825 tonnes and 644,075 tonnes respectively.

Tin at $19,430 lost $20 with a 35-tonne rise in stocks to 14,300 tonnes and cancelled warrants at 4,675 tonnes fell 110 tonnes.

Steel was indicated at $100/154 with a 390-tonne drawdown in both stocks and cancelled warrants to 64,545 tonnes and 49,205 tonnes respectively.

Cobalt and molybdenum were neglected with no changes in stocks.

 

(Editing by  Martin Hayes)

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