LME MORNING - Metals prices bounce solidly, feed off upbeat data flows

By: Martin Hayes

London 01/08/2013 - Base metals advanced during Thursday LME premarket trading amid an improvement in short-term sentiment following the shock-free US FOMC meeting outcome and largely positive Chinese and eurozone PMIs today, traders said.

"Metal prices are receiving an additional boost this morning, thanks to surprisingly positive economic figures from China. Contrary to expectations, the official PMI for the manufacturing sector did not dip below the 50 mark in July," broker Commerzbank said.

Copper and aluminium - at three-week lows earlier in the week - moved up to around their best for a week, while smaller metals lead and tin hit six-week peaks. Further data and events throughout the day - the forthcoming ECB monetary policy meeting and early-afternoon US weekly jobless claims data - could trigger renewed movements.

"The rebounds in the base metals look good and the fact the rallies are being added to this morning is encouraging but, with so much data out and with the [US] unemployment report out tomorrow, it is difficult to have much faith that new trends are getting underway," William Adams of FastMarkets said.

In Europe so far, Spain's PMI was soft at 49.8 but Italy and the eurozone clocked up readings of 50.4 and 50.3 respectively. Earlier, China's official PMI, a survey of large firms, climbed to 50.3 in July from 50.1 in June. The 50 level separates manufacturing contraction from expansion.

But HSBC's PMI, which covers smaller companies, fell to 47.7 from 48.2 in June, failing to allay concerns about China's economic growth. Last month's GDP release showed growth at an annualised rate of 7.5 percent in the April to June quarter, down from 7.7 percent in the first quarter.

Separately, the outcome of the US FOMC meeting held few surprises and had none of the impact of the previous session. The Fed said that it would hold its key rate at near zero and keep buying $85 billion in bonds every month.

In other markets, the euro was losing some ground against the dollar, trading around 1.3240 - it had been at a six-week high of 1.3345 on Wednesday.

"Overall, we would expect more range-trading, with the data likely to provide the noise," Adams added.


Copper moved above $6,800 and is now targeting regaining the $7,000 level. Business at $6,986 per tonne was up $106 or 1.5 percent from the Wednesday close. Warehouse inventories notched up their 12th successive daily decline, falling a net 2,075 tonnes to 312,575 tonnes, the lowest for six weeks.

Aluminium built on the late move on Tuesday when prices regained $1,800. Business today was at $1,826, up $22, while inventories were down 7,425 tonnes at 5,471,100 tonnes.

Lead jumped to $2,118.50, a $48.50 or 2.3-percent gain, with inventories static at 200,225 tonnes. Sister metal zinc gained $25 to $1,868 - stocks dropped 4,075 tonnes to 1,045,400 tonnes.

Tin traded as high as $20,835 and then held at $20,700, up $350. Nickel was up $149 at $13,949, although stocks rose a hefty 1,302 tonnes to a new all-time high of 204,330 tonnes.

Steel billet was neglected but inventories fell 2,015 tonnes to a 10-month low of 50,115 tonnes. Cobalt was indicated at $25,000/27,000, while molybdenum was ignored.

(Editing by Mark Shaw)