LME MORNING - Base metals lose momentum, choppiness expected

By: Kathleen Retourne

London 03/04/2012 - Base metals made a strong start on the LME on Tuesday morning, further building on yesterday’s gains before slowing later - most are now back in negative territory.

The market is expected to be choppy this week due to the absence of China until April 4 for a national holiday, plus the shorter week for Europe and the US for Easter.

The euro at 1.3359 against the dollar is firm but remains vulnerable to headlines and data flow.

"The good sentiment is likely to persist for the remainder of the week, as non-manufacturing PMIs due later this week are likely to confirm economic stabilization as well and as US non-farm payrolls should also come on a positive note on Friday," broker Credit Suisse said.

EU data came in as expected, with final GPD for the quarter at -0.3 percent. Later today EU PPI is due for release, while in the US factory orders, total vehicle sales and the FOMC meeting minutes will also be shown. In addition, FOMC member Williams is speaking.

Aluminium has taken a more bearish slant of late and at $2,127.50 per tonne was down $3.50 on the previous day’s close.

“We are bearish in the both the short and medium terms based on the negative head-and-shoulder pattern and the down channel,” FastMarkets analyst Jono Remington-Hobbs said.

Total aluminium warehouse stocks now stand at 5,071,100 tonnes, down a net 5,825 tonnes. Cancelled warrants at 1,656,325 tonnes were down 3,675 tonnes.

Minimum loading for larger warehouses came into effect yesterday. Warehouses storing more than 900,000 tonnes of metal will be required to deliver out a minimum of 3,000 tonnes per day should there be demand.

Detroit and Vlissingen both hold large quantities of aluminium at 1,425,725 tonnes and 1,040,050 tonnes respectively but just 1,550 tonnes were delivered out of the former and 1,500 tonnes of the latter, according to today's data, which is two days in arrears.

Copper rose to its best since February 10 at $8,702.80 at one stage earlier, extending yesterday's 2.2-percent gain, before retreating below the key $8,700 mark to $8,615, down $25.

Stocks rose 3,100 tonnes to 260,650 tonnes, the highest since March 20, due to warranting of 4,000 tonnes in Baltimore. Cancelled warrants, meanwhile, were down 3,200 tonnes at 80,200 tonnes.

Lead business is unchanged at $2,060, while inventories at 376,300 were down 500 tonnes and cancelled warrants fell 1,300 tonnes to 20,275 tonnes.

Zinc is clinging on to its gains at $2,013, a $5 increase. Stocks at 896,150 tonnes were down 675 tonnes, while cancelled warrants at 10,775 were down 425 tonnes.

Nickel proved resilient - the metal was one of the few to make any gains, holding above $18,000. It was recently at $18,478, up $253 and at a one-week high. Inventories were unchanged at 100,542 tonnes and cancelled warrants at 7,692 tonnes were down 2,040 tonnes.

Tin at $23,150 was down $100. Stocks at 13,285 tonnes were down 195 tonnes, while cancelled warrants at 1,080 tonnes were unchanged.

Steel stocks declined 2,080 tonnes to 39,325 tonnes - the lowest since July 28 - with prices at $505/520. Meanwhile, in the minor metals, cobalt was quoted at $30,500/32,500 and molybdenum was neglected.

(Additional reporting by Clara Denina, editing by Mark Shaw)