LME MORNING - Base metals rally looks complete but nickel bucks downward trend

By: Kathleen Retourne

London 11/04/2013 - Base metals were mostly lower on the LME on Thursday morning, with only nickel managing to hold in positive territory.

Still, the retreat has generally been slight, with most metals not far from their closing levels in unremarkable trading.

“Base metals prices are treading water at the moment, not far off the top of their current ranges,” a trader said. “Rallies may have run their course for now, as there are still negative factors looming in the distance.”

In currencies, the euro is down from yesterday’s near-five-week high against the dollar of 1.3122 but was last up 0.3 cents on today’s lows at 1.3080.

"The dollar only reacted with temporary strength to the release of the FOMC minutes which showed that some members would like to taper the quantitative easing program only later in the year," Credit Suisse said.

The minutes of the FOMC's March meeting showed that the Federal Reserve remains committed to purchasing $85 billion in new debt per month in an open-ended programme until the labour market has improved substantially.

Markets have largely ignored data released so far today. In data from China, loans came in at 1.06 trillion yuan ($171 billion) in March, well above the forecast 890 billion yuan and the previous month’s 620 billion yuan, while M2 money supply at 17.7 percent beat the expected 14.8 percent and the previous 15.2 percent..

Data from the eurozone was a bit of a non-event - the German final CPI for March came in on target at 0.5 percent, while the French CPI for the same month at 0.8 percent was up on the expected 0.7 percent.

US import prices and weekly US unemployment claims are due later but Investors will be looking ahead to the release of March US retail sales figures on Friday for the next impetus. They may, however, decide to stay on the sidelines until Monday once China has released its GDP, industrial production and retail sales data.


Copper at $7,550 per tonne was down $25 on the previous day’s close, while volumes remain subdued -around 5,225 lots had changed hands on Select by 10:15 GMT.

“Copper should find further support around $7,500, helped also by the LME/SHFE arbitrage window, but the increase in Chinese money supply above the PBoC’s target of 13 percent will increase pressure to tighten monetary policy,” FastMarkets analyst James Moore said.

“With the Shanghai/LME arb window nearly open, we would think the red metal doesn’t have very much downside left in the short term and that any break towards (or even below) the $7,400 level should be treated as buying opportunities,” RBC Capital Markets said.

Inventories were up for a third consecutive day, rising a net 2,250 tonnes to 590,175 tonnes, due mostly to a 3,125-tonne increase in Johor. Cancelled warrants halted an eight-day run of increases, dropping 975 tonnes to 156,000 tonnes.

Aluminium at $1,896.25 was down $14.25 despite a 10,800-tonne drawdown in inventories to 5,192,100 tonnes. Cancelled warrants at 1,963,700 tonnes were down 10,675 tonnes. In spreads, the much-watched June/July date was last at a $5 contango after closing at $2.00 contango yesterday, having traded as tight as level.

“We still think that particular spread will stay tight in the run up to prompt,” RBC Capital Markets added.

Nickel edged $74 higher to $16,124 although stocks rose to a fresh all-time high of 168,378 tonnes, up 678 tonnes. Johor stocks climbed 798 tonnes to 45,090 tonnes - inventories here have risen 39 percent since the start of the year, although Rotterdam remains the largest holder of nickel at 72,210 tonnes. Cancelled warrants rose 1,746 tonnes to 24,702 tonnes.

Lead at $2,084 was $6 lower despite a 75-tonne decline in inventories to 260,175 tonnes, the lowest since October 9, and a 25-tonnes rise in cancelled warrants to 143,500 tonnes.

Zinc fell $13.25 at $1,896.75 - inventories rose 1,175 tonnes to 1,134,825 tonnes and cancelled warrants dropped 7,325 tonnes to 662,375 tonnes.

Tin was last at $22,730, a drop of $145. Stocks rose 40 tonnes to 14,465 tonnes and cancelled warrants at 3,265 tonnes were down 385 tonnes.

“Although the tin price has not been able to defy the downswing on the commodities markets in recent weeks entirely, it is nonetheless holding its own at the relatively high level of nearly $23,000,” Commerzbank said.

Steel was offered at $300, with inventories unchanged. In the minor metals, cobalt was last indicated at $25,000/25,750 - stocks and cancelled warrants both slipped 27 tonnes at 461 tonnes and 183 tonnes respectively due to drawdowns in Rotterdam.

Molybdenum was offered at $26,500; stocks were neglected.

(Editing by Mark Shaw)