LME MORNING - Base metals inch higher despite copper and aluminium stock increases

By: Kathleen Retourne

London 08/02/2013 - Base metals were higher on Friday on the LME, lifted by broadly constructive Chinese economic releases earlier, and shrugging off rising inventories, with copper and aluminium posting  notable jumps.

Business was slow, however, in the last trading day ahead of the Lunar New Year holidays. Asian markets will be closed at the start of next week, while in China itself exchanges there will be officially closed over February 9-15.

“We have the impression that other than last year China had not shown any intention to seek a lower copper price and hence we do not expect prices to jump sharply next week during the Chinese holiday,” Triland said in a report.

Despite the modest uptick, prices in the complex remain on the defensive, having re-traced in the last three days from multi-month and multi-week peaks - in some cases markets have run ahead of fundamentals.

"We believe the positive sentiment is more related to pre-emptive buying rather than a material pick-up in current demand," broker ANZ said.

In other markets, trends were less exciting, with some signs emerging that the momentum seen in global equities was slowing as well. The euro, which was battered on Thursday by remarks from ECB President Mario Draghi, partly recovered to settle around 1.3405 against the dollar. It fell as low as 1.3368 on Thursday, its lowest since January 25.

In the data seen so far, China's trade surplus in January shrank to $29.2 billion from $31.6 billion in December, but beat the forecast for a $24.3 billion surplus. The CPI rose 2.0 percent, against a predicted 2.1 percent increase, while the PPI fell 1.6 percent as anticipated.

In metals specific figures, copper imports in January rose by 2.9 percent month-on-month to 350,958 tonnes, while aluminium imports climbed by 4.4 percent month-on-month to 69,024 tonnes in January.

In the eurozone Italian industrial production was better than the expected 0.2 percent at 0.4 percent. Later today, US trade balance data and wholesale inventories figures are released.


Copper at $8,233 per tonne was up $33 on the previous day’s close. Inventories increased for the fourth consecutive day, up a notable net 10,925 tonnes to 399,825 tonnes – the highest level since November 16.

Antwerp was responsible for the move higher, it posted a 8,100-tonne increase to 95,225 tonnes, the highest ever for that location. Additional increases were seen in Johor (up 1,750 tonnes) and New Orleans (up 650 tonnes), while Barcelona and Busan both rose 500 tonnes and Hull increased 75 tonnes. 

“It is just a general oversupply to the market - the producers hold stuff off warrant to find the end -user but are having difficulty obviously,” a copper trader said “[It is] bearish but the trend is up, short-term.”

 Cancelled warrants for the red metal declined 575 tonnes to 32,175 tonnes.

Aluminium scraped back over $2,100, it was last at $2,109, an $11 increase, while in spreads June/July was last at $14.00/16.00 backwardation. It too saw increases in stocks this morning, rising 20,150 tonnes to 5,158,925 tonnes, due to a 26,650-tonne increase in metal held in Vlissingen. Cancelled warrants were down 2,000 tonnes at 2,011,500 tonnes.

Nickel at $18,290 was up $110, despite a 1,404 tonne increase in stocks. Total stocks now stand at 152,400 tonnes, the highest since April 1, 2010. Cancelled warrants were up 480 tonnes at 24,096 tonnes.

Lead increased $8 at $2,416, although inventories increased 600 tonnes to 288,100 tonnes and cancelled warrants at 153,050 tonnes were down 75 tonnes. Sister metal zinc was last at $2,179, a $16 rise as stocks and cancelled warrants fell 2,825 tonnes to 1,193,200 tonnes and 654,725 tonnes respectively.

“Other lead news was that the LME will allow the producer Vedanta to deliver into LME warehouse as of immediate effect, and that lead's premium to zinc is now at its lowest level this year after the news from Glencore to restart production at its smelter in Italy,” said Triland.

Tin increased $125 tonnes to $24,800 tonnes with a five-tonne decrease in stocks to 13,310 tonnes and a 150-tonne downturn in cancelled warrants at 2,240 tonnes.

Steel was last at $300/330, while in minor metals cobalt was indicated at $25,000/26,450 tonnes and molybdenum was neglected.

(Editing by Martin Hayes)