LME MORNING - Most base metals slip, slew of poor European GDP data takes toll

By: Kathleen Retourne

London 14/02/2013 - Base metals were mixed on Thursday morning after an unsettled day’s trading, with the release universally disappointing fourth-quarter GDP data from the eurozone weighing.

Technical buying had pushed many metals - particularly aluminium - higher during strong Asian trading but the mid-morning run of forecast-missing data dragged the euro more than a cent lower and dragged most of the complex below their Wednesday kerb closes.

The euro was last at 1.3331 against the dollar, down more than a cent, after French, German and Italian preliminary GDP data for the final quarter of last year all undershot expectations - the Italian reading of -0.9 percent was the biggest miss.

"The euro will be supported here and move higher - I think we will see steady to higher prices over the coming days as levels of support hold," a trader said.

The flash GDP reading for the eurozone as a whole disappointed at -0.6 percent against an expected -0.4 percent.

"This slump in output and in GDP growth in general is the worst since the first quarter 2009 in the nadir of the great recession. The eurozone shrunk by 0.5 percent in 2012 - the first year of no growth in any quarter since 1995," FastMarkets analyst Jono Remington-Hobbs said.

In other data, Japanese GDP growth disappointed today - its economy contracted for the third consecutive quarter, keeping the country in recession.

Data due out later today includes US unemployment claims, while tomorrow's G20 meeting - at which currency devaluation will be high on the agenda - could provide further direction.

"Today's poor [Japanese] data should act as an insulator against criticism from other nations [on moves that have lead to the 15-pewrcent depreciation of the yen against the dollar since November] at the G20 meeting on Friday. It should also offer the BoJ more room to manoeuvre when Governor Shirakawa's replacement takes the helm in April or May," Remington-Hobbs said.


Aluminium continued to rise, hitting $2,166.50 before settling back to $2,151 per tonne, still up $10 on the previous day’s close and one of the few metals to trade in positive territory. A close above $2,162 today could set up a test of $2,200, RBC Capital Markets said.

"[There has been] some technical buying on aluminium," the trader said. "Aluminium has broken a short-term trend line, while copper was trading around seven- and 10-day moving average on the daily chart."

With nearly 6,000 lots changing hands on Select so far, aluminium has also outpaced the rest of the complex in volume terms. In stocks, inventories rose a net 575 tonnes to 5,147,800 tonnes although Vlissingen holdings rose 7,750 tonnes to 1,535,225 tonnes. Cancelled warrants fell 10,175 tonnes to 1,975,375 tonnes.

But aluminium stocks in Japan increased 11 percent in January to 315,500 tonnes, according to data from Japanese trading house Marubeni, the highest level since March 2009.  

"Nonetheless, the aluminium price this morning has risen to nearly $2,170, putting it at its highest level for one-and-a-half months. The market is becoming more and more confident that global aluminium demand will gather pace again this year," Commerzbank said in a note.

Copper peaked at $8,259.235 earlier but dropped to $8,211, a $15 loss. By 10:45 local time, just 2,300 lots had changed hands on Select. Inventories nudged 200 tonnes higher to 399,125 tonnes while cancelled warrants at 30,875 tonnes were up 600 tonnes.

Zinc hit a 17-month high on Wednesday but slipped when technical buying interest declined. The metal was last at $2,193, a $2 loss. Inventories were unchanged for the second consecutive day at 1,188,100 tonnes.

Lead at $2,403 was $2 lower, while stocks and cancelled warrants were both down 275 tonnes to 287,075 tonnes and 152,100 tonnes respectively.

Nickel was $9 higher at $18,369 - stocks fell 192 tonnes but cancelled warrants fell 72 tonnes to 24,840 tonnes. Tin at $24,850 was down $100; stocks were stagnant.

Steel was last at $300/330 while cobalt was indicated at 25,000/26,500 - cancelled warrants rose two tonnes to 68 tonnes. Molybdenum was neglected.

(Editing by Mark Shaw)