LME MORNING - Base metals uninspiring in dull trading, nickel hits 32-month low

By: Kathleen Retourne

London 12/07/2012 - Base metals are continuing the week much as it started, trading in tight ranges with a tendency towards the downside in premarket trading on Thursday. All the metals were lower, with nickel falling to a 32-month low below $16,000.

A quiet and cautious day is expected ahead of tomorrow’s GDP data from China.

 In currencies, the euro is still hovering around Wednesday’s two-year lows of 1.2208 against the dollar - it was last at 1.2221.

“The euro/dollar remains well offered below 1.2300 as the slow drift lower continues,” Credit Suisse said. "It is now critical that the euro/dollar closes the week back above the 1.2300 level, failing which more weakness may develop."

The pressure and the bias remains to the downside given overall economic stickiness, with yesterday's minutes from the June meeting of the Federal Open Market Committee (FOMC) not hinting noticeably at the need for additional accommodative monetary policies. The next meeting of the FOMC is scheduled to start on July 31.

Datawise, Chinese data was positive, with new loans at 919.8 billion yuan (145.5 billion) in June, up from 793.2 billion yuan in May and beating a forecast of 887 billion yuan while M2 money supply for June at 13.6 percent beat the expected 13.5 percent and was up from May's 13.2 percent.

EU industrial production data for May was better than the expected 0.0 percent at 0.6 percent. The US June Federal budget balance and import prices and weekly US unemployment claims are due for release later today.


Copper at $7,512.25 per tonne was down $26.75 on the previous day’s close. LME inventories were also down, falling a net 975 tonnes to 251,375 tonnes due to drawdowns in New Orleans, Rotterdam and St Louis.

But there was a 300-tonne increase in Vlissingen, taking total stocks in this location to 7,100 tonnes. Vlissingen will be delisted as a delivery point for the red metal as of July 25 - a move to address collateral damage caused by aluminium queues.

Cancelled warrants for copper have ticked up to 53,625 tonnes - more than double the 26,600 tonnes at the start of the month and 11,575 tonnes more than yesterday’s total. New Orleans has the most cancelled warrants at 15,575 tonnes, followed by Busan’s 14,375 tonnes and Gwangyang, South Korea, with 13,250 tonnes.

Nickel dipped below $16,000 to $15,925, its lowest since December 7, 2009. Stocks rose 384 tonnes to 105,912 tonnes and cancelled warrants at 9,288 saw a marginal increase.

Aluminium fell $16 to $1,885, while inventories were down for the third consecutive day, falling 10,650 tonnes to 4,800,400 tonnes, while cancelled warrants at 1,780,050 lost 10,500 tonnes.

Zinc was $12 lower at $1,840 even after stocks fell 2,075 tonnes to 981,000 tonnes, due to cancellations in Malaysia and the US. But there was an increase of 2,025 tonnes in Vlissingen, taking total stocks there to 12,750 tonnes.

Cancelled warrants rose 3,975 tonnes to 199,225 tonnes, the bulk of which is in New Orleans at 110,650 tonnes and Port Klang, Malaysia, at 70,150 tonnes.           

Lead at $1,856 fell $12 despite a decline in inventories of 7,757 tonnes to 345,750 tonnes and a rise in cancelled warrants to 47,675 tonnes.

“The lead market may be one to watch longer term,” ANZ Research said. "A heat wave in the US is stressing vehicle batteries and once the weather cools in the autumn and we move into winter, we may well see a spate of auto failures and strong demand for replacement starter batteries."

Tin at $18,660 fell $190 while stocks were unchanged at 12,210 tonnes.

Steel at $400/420 was steady, with stocks unchanged. In the minor metals, cobalt was indicated at $27,000/28,250 and molybdenum was offered at $28,200.

(Additional reporting by Martin Hayes, editing by Mark Shaw)