LME MORNING - Base metals cautiously steadier, look to rebase after pressure week

By: Martin Hayes

London 14/06/2013 - Base metals held at steadier levels during Friday LME premarket trading amid general uncertainty as a volatile week draws to a close, with a stream of forthcoming metals-sensitive economic data also resulting in cautious activity, traders said.

"Metal prices are recouping some of yesterday’s losses this morning on the back of firm Asian equity markets," broker Commerzbank said.

On Thursday, nickel was the worst performer, falling near to $14,000 and its lowest price in four years, while the rest of the complex also struggled, with copper reaching a seven-week low, tin a five-week low and zinc its lowest in three weeks.

"The market is ticking over at the moment - it is not too busy. I guess that today it is [a question of] getting through the data flows and see[ing] what happens in other markets," a trader said.

The euro was holding basically steady at around 1.3320 against the dollar, while equity markets in Asia and Europe were steadier and futures indicated a higher start in the US later.

Market sentiment is highly malleable in the short term, with global economic growth prospects mixed and monetary stimulus trends approaching a state of flux.

Today, the economic calendar primarily revolves around European CPI numbers for May, US PPI numbers for the same month and the University of Michigan consumer sentiment index - forecast at 84.9.


Copper was slipping back after regaining levels above $7,100 in Asia earlier, trading at $7,094 per tonne, still up $44 from Thursday, when prices fell as low as $7,011.25. Warehouse stocks jumped a net 9,775 tonnes to 618,075 tonnes, the highest since May 25, due to a 12,650-tonne warranting in Johor.

Nickel scampered higher to trade at $14,275, up $215 from yesterday - prices earlier hit a four-year low of $14,052 but have on successive days avoided falling below the $14,000 level.

Inventories were up 36 tonnes at 183,708 tonnes, a mere 12 tonnes below the all-time highs set two days ago.

The global market is in supply surplus due to the commissioning of numerous new mining projects despite robust demand from the stainless steel industry, Commerzbank noted. Still, it does not foresee prices falling significantly further from here.

"The current price level makes it impossible for many nickel producers to operate at a profit. Instead, we expect to see cuts in production over the coming weeks, which should shore up the nickel price," it added.

Aluminium likewise cut gains, trading at an unchanged $1,857, after stocks rose 13,475 tonnes to 5,219,825 tonnes, the highest since May 23, with 21,050 tonnes warranted in Vlissingen.

In others, zinc advanced $13 to $1,855, with inventories down 4,125 tonnes at a one-week low of 1,087,500 tonnes. Lead was $20 higher at $2,106. Stocks were down 2,625 tonnes at 197,350 tonnes, the lowest since October 2010.

Tin was $50 lower at $20,300, looking vulnerable to a retest of mid-week seven-week lows of $20,230. Inventories, meanwhile, were down 105 tonnes at a one-week low of 14,390 tonnes.

Steel billet was neglected but, in the minors, cobalt traded at $30,250, up $1,000. Molybdenum was also neglected, with stocks rising 48 tonnes to 216 tonnes, the highest since September 2012.

 (Additional reporting by Eddie van der Walt, editing by Mark Shaw)