LME MORNING - Base metals under pressure, await clarity on US Fed policy

By: Kathleen Retourne

London 18/06/2013 - Base metals were all lower on Tuesday, pressured by concerns over possible changes to the US central bank's stance on loose monetary policy and disappointing data from China.

These outweighed positive EU data, which boosted the euro - the single currency was last at 1.3390 against the dollar, having earlier hit a four-month high of 1.4

“Prices are under continuing pressure ahead of the FOMC meeting as the proposition of tapering QE is mooted, but perhaps this prospect is largely priced into the market,” a trader said.

While the Federal Reserve is expected to keep ultra-low interest rates unchanged, any hint in its policy statement that it is considering tapering stimulus measures would have an impact on commodity prices.

“Commodity markets started the new week in a fairly lacklustre fashion. Apparently, market participants are reluctant to open new positions ahead of the Fed meeting later this week. Cautious trading is likely to continue today,” Credit Suisse said.

“Of course anything said about the current QE program[me] will be closely scrutinized and could bring volatility back to the market. Until then expect the market to remain in a tight range,” Triland added.

Also, Chinese data released this morning painted a more bearish economic picture for the world's top metals consumer. The May CB Leading Index - a composite index based on six economic indicators - was up 0.3 percent, down from 1.5 percent in April, while May foreign direct investment was up 1.0 percent, down from 1.2 percent last month.

Housing data from China showed that new home prices in May increased in 69 out of the 70 large cities tracked by the government from the same month a year ago, which may discourage Beijing from launching new stimulus measures to spur economic growth.

“Data from China this morning continues to add bearish tone as concerns about pace of growth linger. A weak dollar has failed to make any impact - how the markets interpret forthcoming events will be key,” the trader added.

The dollar index remains around recent lows - it was last at 80.68, hit by a strengthening of the euro. In eurozone data, German ZEW economic sentiment at 38.5 was close to the expected 38.2, while the WEU-wide figure at 30.6 surprised to the upside.

“[But] the metals continue to fail to take advantage of the weaker dollar, which does suggest there is little appetite around as we head into the summer slowdown,” FastMarkets analyst William Adams said.

Later today the US will release housing starts, building permits and CPI numbers.


NICKEL, ALUMINIUM STOCKS AT ALL-TIME HIGHS

Aluminium traded recently at $1,837.50 per tonne, down $7 on the previous day’s close following conflicting stock moves this morning.

Inventories jumped a net 77,025 tonnes to a fresh all-time high of 5,348,150 tonnes due mostly to a second consecutive daily rise in Detroit, this time of 74,000 tonnes to 1,419,925 tonnes. But cancelled warrants also soared, up 72,600 tonnes at 2,124,450 tonnes. The Vlissingen total leapt 42,800 tonnes to 1,020,725 tonnes, while Detroit at 977,800 tonnes was up 31,975 tonnes.  

Copper fell $52.50 to $7,029.50. Stock moves were unsupportive - inventories rose 2,675 tonnes to 632,150 tonnes and cancelled warrants fell 1,025 tonnes to 226,025 tonnes.

Lead slipped $15 to $2,093.50 although stocks fell for the fourth consecutive day, losing 3,550 tonnes to 189,050 tonnes. But cancelled warrants also fell 3,550 tonnes to 130,750 tonnes.

Zinc slipped $6 to $1,852 - stocks fell 2,200 tonnes to 1,081,575 tonnes while cancelled warrants at 715,100 tonnes were down 3,525 tonnes.

Nickel at $14,107 was down $183 after stocks climbed 2,124 tonnes to 185,748 tonnes, a fresh record high. Cancelled warrants fell 276 tonnes to 26,664 tonnes.

Tin at $20,231 slipped $168, with stocks at 14,385 tonnes down 180 tonnes and cancelled warrants at 2,830 tonnes down 495 tonnes.

Steel was quoted at $140/180 - while stocks were unchanged, cancelled warrants fell 1,000 tonnes to 57,140 tonnes. Cobalt was indicated at 28,500/30,350 - stocks rose three tonnes to 450 tonnes - but molybdenum was neglected.


(Editing by Mark Shaw)

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