London 07/10/2013 - Base metals mostly drifted lower in premarket trading on Monday, with several down about one percent at the start of LME Week and after the US government shutdown enters its second week.
"The base metals are holding well given the uncertainty in Washington. There is probably room for a relief rally if progress is made but, with that looking some time off, we would still expect the metals to concentrate on the views that will come to light during London’s Metal week," FastMarkets analyst William Adams said.
Volumes have been exceptionally light, with around 3,300 lots of copper changing hands on Select by 09:35 BST.
Congressional Republicans and Democrats continue to spat over the 2013/2014 budget. One casualty of the impasse in Washington has been the closely watched non-farm employment report for September that was scheduled for release on Friday.
"With non-farm payrolls a non-event courtesy of the US government partial shutdown, markets had Christmas holiday feel on Friday," ANZ said.
A quick resolution to the standoff between Democrats and Republicans looks unlikely, with Credit Suisse predicting that it could drag on throughout the week.
"With little movement on either side of the party divide so far, the US government shutdown will enter its second week," it said. "As time for raising the debt ceiling is slowly running out - 17 October, according to the US Treasury - it becomes increasingly likely that both issues will be resolved in one comprehensive negotiation."
Also in the US, the market will now start to focus on the release of the Federal Open Market Committee minutes on Wednesday, following the surprise decision not to start to taper its quantitative easing programme.
Today's data calendar is light, with Japan's August leading indicators coming in just below target at 106.5 percent. Later, the market awaits the eurozone's final GDP and US consumer credit.
The dollar is slightly weaker against the euro at 1.358, down a quarter of a cent, though off its recent eight-month low. Equities are generally lower, the Nikkei and the FTSE 100 both losing ground.
In the base metals, copper was down $70 or almost one percent on Friday's close at $7,190 per tonne. Stocks fell a net 2,500 tonnes to 523,425 tonnes, the lowest in nearly seven months, while cancelled warrants fell 2,825 tonnes to 258,775 tonnes.
Aluminium edged $2 lower to $1,843.50, with stocks falling 6,450 tonnes to 5,354,025 tonnes and cancelled warrants jumping 32,350 tonnes to 1,902,875 tonnes, the bulk of the change occurring in Vlissingen.
Nickel slipped $186 at $13,864 - stocks rose 366 tonnes to 227,928 tonners. Zinc also fell $5 despite stocks dropping 3,950 tonnes to 1,009,075 tonnes
Tin is the biggest loser, falling $500 or 2.1 percent to $23,500. Stocks were unchanged at 13,195 tonnes
Lead nudged $4 higher to $2,050. Inventories and cancelled warrants both fell 500 tonnes to 237,300 tonnes and 60,575 tonnes respectively.
Cobalt, molybdenum and steel billet were neglected - stocks of the latter fell 1,105 tonnes or around four percent to 25,740 tonnes.
(Editing by Mark Shaw)