LME MORNING - Base metals steady in quiet premarket, caution prevails ahead of US jobs numbers

By: Martin Hayes

London 05/04/2013 - Base metals business ticked over during a slow Friday LME premarket, with general financial sector involvement deterred by caution ahead of this afternoon's US employment report for March, traders said.

Continued holidays in Asia today - China's SHFE remains closed until next week - similarly dampened interest and activity. After Thursday's snap short-covering rally, which lifted prices away from multi-month lows, momentum has slowed now.

"We would say after the sell-off they were starting to look oversold so we would not be surprised by some more bargain-hunting, which in turn could prompt more short-covering," William Adams of FastMarkets said.

"At some stage we will get back to fundamentals. At the moment it is funds and, at times, mental," a trader said

In other markets, the euro was consolidating after a snap rally on Thursday, when it hit a two-week high of 1.2949 against the dollar. This morning it stood around 1.2925. Equities were mixed in Europe while financials await the March US non-farm payroll figures set for release later today.

The ADP survey of private-sector job growth came in below expectations on Wednesday, while other disappointing US data this week have also fuelled worries that the official jobs report will show the country having added fewer than the forecast of 198,000 new jobs last month.

So far today, the fourth-quarter 2012 eurozone final GDP outturn has shown a 0.6-percent fall as expected. Later, the February US trade balance, March US average hourly earnings and February US consumer credit figures will be released.  

For the metals, there is likely to be little respite from the current trend, which is geared to the downside but interspersed with snap rallies.

"We would expect volatility to remain elevated over the next few trading sessions as the market searches for its new range," broker RBC said.


Copper was trading comfortably above $7,400, having rallied stoutly from fresh eight-month lows of $7,331.25 on Thursday morning. Recent business at $7,455 per tonne was $15 higher.

On the supply side, although copper inventories are rising consistently, the disruption to short-term availability due to the Chilean port dispute may deter fresh selling for now.

Still, inventories rose for the 35th successive day, up a net 425 tonnes at 579,600 tonnes, a fresh high since late September 2003. Cancelled warrants - metal booked for removal - also rose 3,050 tonnes and at 147,025 tonnes are a new all-time high.

Aluminium was consolidating after a bounce on Thursday, trading at $1,886, up just $1 from yesterday. Inventories rose 6,000 tonnes to 5,212,800 tonnes due to a warranting of 15,000 tonnes in Vlissingen. Cancelled warrants jumped 58,425 tonnes to 1,971,850 tonnes, the highest since February 18.

In others, lead was just $1 lower at $2,074 - stocks were down 500 tonnes at 260,400 tonnes, a fresh six-month low. Sister metal zinc absorbed some early profit-taking and at $1,889 was unchanged. Inventories dropped 2,225 tonnes to 1,154,500 tonnes, the lowest since November 15, 2012.

Nickel traded at $16,110, up a modest $10, while inventories rose 342 tonnes to 166,284 tonnes. Tin was $50 higher at $22,800 - stocks dropped 85 tonnes to 14,400 tonnes.

Steel billet was indicated at $205/250, while inventories fell for the third day in a row - down 585 tonnes at a three-month low of 81,445 tonnes. In the minors, cobalt was steady at $25,000/25,750, with stocks falling 19 tonnes to 467 tonnes. Molybdenum was neglected.

(Editing by Mark Shaw)