LME MORNING - Metals mark time after rally slows, gear up for FOMC in midweek,

By: Martin Hayes

London 17/06/2013 - Base metals eased back gently from their Asian-hours peaks during Monday LME premarket trading, with sentiment cautious in the immediate term ahead of the outcome of the US FOMC meeting on Wednesday evening.

This monthly meeting will be more closely scrutinised than usual throughout the financial sector, traders said.

"The focus for the market will be the US Fed (FOMC) meeting, which will be keenly eyed for clues on policy with particular emphasis on the QE program[me]," LME RDM Sucden said.

The spotlight will be on the Fed's monetary policy statement on Wednesday, which may well determine how long the central bank's $85 billion-per-month bond-buying programme will last.

The possibility has been mooted that the US will change its long-running monetary policy stance and hint at QE tapering. Much depends on the interpretation of recent US economic data and whether growth is strong enough and is capable of being sustained.

"Ahead of that, some support seems to have been found in the metals. Prices are getting some lift, which might well take prices higher in the short term within recent ranges," William Adams of FastMarkets said.

As well, the G8 meeting in the UK this week could see some developments on trade and tax policies that affect financial markets.

Before that, the economic data flow is low-key today. The April eurozone trade balance showed a 16.1-billion-euro deficit, against a forecast 21.2 billion euros, while Italy's trade deficit was 1.91 billion euros compared with a predicted 2.48 billion euros. Later, the June US Empire State Manufacturing Index and NAHB Housing Market Index will be released.

For the metals, also, pricing takes place against the June 'third Wednesday' cash prompt date during the official rings early this afternoon.


ALUMINIUM INVENTORIES HIT NEW RECORD HIGH

Aluminium fell away from its early peaks of $1,867 to trade at $1,847 per tonne, down $4 from Friday's kerb close. The market was not helped by inventory data - stocks soared a net 59,600 tonnes to 5,279,425 tonnes, a new all-time high, with 54,775 tonnes warranted in Detroit and 9,550 tonnes in Vlissingen.

Metal was warranted against the June 'third Wednesday' prompt date, which trades as cash today. The cash/July spread, which as June/July was a potential tightness hot-spot, was around $11.50/12.00 contango - in recent months it swung in and out of backwardation. Cash/one day was trading at level.

Copper slipped from its highs of $7,176, settling back at $7,108, up $23 still. Stocks rose 11,400 tonnes to a one-month high of 629,475 tonnes, with an 11,925-tonne warranting in Johor. Total inventories are just 450 tonnes below the near-10-year highs set on May 17.

Nickel was $114 lower at $14,211 and is vulnerable to a test of the $14,000 level - on Friday prices touched a four-year low of $14,052. Stocks fell 84 tonnes to 183,624 tonnes.

In others, zinc was $2 lower at $1,858, while stocks were down for the sixth day in a row - falling 3,725 tonnes to 1,083,775 tonnes, the lowest since June 6. Lead traded at $2,112, up $4 still, with inventories down 4,750 tonnes at 192,600 tonnes, the lowest since September 30, 2010.

Tin was $95 lower at $20,300, with stocks down 185 tonnes at 14,205 tonnes. Steel billet was neglected, while inventories fell 65 tonnes to 76,180 tonnes, a six-month low.

In the minors, cobalt was quoted at $29,000/30,650 tonnes. Molybdenum traded at $23,200 against a previous close of $23,000/24,000 - there were no inventory changes in either metal.


(Editing by Mark Shaw)

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