LME MORNING - Metals prices sag on lack of drivers, copper back uner $7,000

By: Martin Hayes

London 26/07/2013 - Metals prices lost ground during LME Friday pre-market trading, as the drift of the last two days continued, reflecting the lack of short-term drivers and continued slow summer conditions, which outweighed the potential impact of a firmer euro.

Range-bound business is expected for most of the day, ahead of late-afternoon US consumer sentiment data, which may trigger end-week booksquaring in financial markets.

"Base metals are hardly profiting at all from the weak US dollar, and have declined moderately across the board. Among other factors, falling Chinese equity markets are weighing on prices," broker Commerzbank said.

The mixed results of manufacturing PMI data this week - results for the US and eurozone surprised to the upside, but China disappointed - left market participants with an unclear outlook on global growth.

In data releases yesterday, new weekly US unemployment figures were higher than expected, coming in at 343,000, while June durable goods orders surprised with a reading of 4.2 percent, up from 3.7 percent and above the forecast 1.1 percent. Core durable goods - which excludes transportation items - were flat, however, while the market forecast half a percent of growth.

Today, the data focus will be on this afternoon's revised University of Michigan consumer sentiment number, forecast at 84.


Copper was again below the $7,000 per tonne level, trading at $6,950, a $60 loss, although the inventory downtrend continued, which, alongside a narrow contango, is providing some cushioning on the downside. Stocks were down for the eighth day in a row, falling 1,775 tonnes to a five-week low of 621,175 tonnes.

Aluminium buckled once more, and looks set to test $1,800 on the downside, with business at $1,813, a $10 loss from the soft Thursday close. Stocks rose a punchy 19,150 tonnes to 5,483,175 tonnes, just 3,125 tonnes under the recent all-time high.

This was due to a 26,500-tonne warranting in Vlissingen, where the total inventory now stands at 2,121,875 tonnes.

In others, zinc was $10.50 lower at $1,867 - stocks were down for the seventh successive day, dropping 4,275 tonnes to 1,051,025 tonnes. Lead was $2 lower at $2,068, with a modest 250-tonne decline seen in stocks to 198,250 tonnes.

Nickel business at $14,127 was $48 lower - inventories dropped 432 tonnes to 199,578 tonnes. Tin traded at a virtually unchanged $19,380, but stocks rose for the fifth day on the trot - up 155 tonnes at 14,545 tonnes, the highest for three weeks.

Steel billet was neglected, while stocks dropped 2,080 tonnes to a six-month low of 58,240 tonnes. In the minors, both cobalt and molybdenum lacked interest - stocks of the former rose three tonnes to a three-month high of 479 tonnes.

(Editing by Eddie van der Walt)