LME MORNING - Metals retreat as Chinese data underwhelms, nickel and tin set multi-month lows

By: Martin Hayes

London 11/05/2012 - Base metals fell back during Friday LME premarket trading, fretting over current political and economic worries. The complex is set to end the week on a defensive note - nickel and tin both hit fresh multi-month lows.

"It is not that busy but it is off all round, as all markets are a bit spooked today - equities are down, the euro is down and there is not much good news around," a trader said.

This was underlined earlier by a string of uninspiring figures from China, the world's second largest consumer, while the European Commission (EC) reported that the EU was in mild recession, with GDP seen contracting by 0.3 percent this year.

Other commodities were lower as well - platinum and gold dropped to four-month lows, while palladium hit a five-month nadir. The euro was struggling after hitting a three-and-a-half-month low of 1.2903 against the dollar and was recently around 1.2935.

In the Chinese data, the slowing pace of China's economic expansion, suggested in Thursday's trade data, was underlined again this morning by a raft of figures.

Chinese industrial production in April rose 9.3 percent from the year-ago level but this undershot a forecast of a 12.1-percent increase. April retail sales rose 14.1 percent, below a predicted 15.1 percent.

In other numbers earlier, the CPI for April was in line with the forecast of a 3.4-percent increase, while the April PPI fell 0.7 percent against an expected drop of 0.5 percent.

US data releases scheduled late today include the April PPI and the Preliminary UoM Consumer Sentiment index for May.

Traders said the complex is set for a choppy end to the week, given the strains in the eurozone surrounding Greece and Spain as well as the patchy nature of the US economy. Technical factors and positioning ahead of Monday's 'third Wednesday' prompt date pricing, particularly in copper, will add to volatility.


Copper was moving either side of the $8,000 per tonne, with recent trade at $8,001, down $104 from the previous close. In the spreads, 'TOM/next' (tomorrow/next day) traded at $6.00 backwardation, while May/June was at $48 premium.

Warehouse stocks rose, meanwhile, ending a 14-day run of falls. Inventories were up 1,425 tonnes at 221,275 tonnes, with 4,175 tonnes registered in Busan, Korea - possibly Chinese re-shipments against forthcoming short positions.

Aluminium was $6.50 lower at $2,039 -  just about holding above four-month lows set earlier this week. Warehouse stocks climbed 4,300 tonnes to 4,951,125 tonnes, with 7,275 and 8,075 tonnes warranted in Detroit and Vlissingen respectively ahead of next week's 'third Wednesday'  May date.

Nickel hit $17,005, down $160 and the lowest for five months. Although stocks dropped 60 tonnes to 106,302 tonnes, they remain close to 10-month highs. News that Vale SA has declared force majeure on deliveries from its nickel operations in New Caledonia had little impact.

Tin hit $20,251, the weakest since mid-January, against a previous $20,425 before trading recently at $20,375 - the market looks set to test $20,000.

Zinc slipped to $1,930, a $39 decline - stocks fell 1,750 tonnes to 933,325 tonnes. Lead was $35 lower at $2,065 - inventories dropped 150 tonnes to 352,525 tonnes.

Steel was unchanged at a soft $460/480, while inventories fell 650 tonnes to 28,080 tonnes, the lowest since late-June, 2010. Cobalt was quoted at $30,000/31,000 and molybdenum at $30,000/31,500.

(Editing by Mark Shaw)