LME MORNING - Base metals mostly firmer despite surprise Chinese trade deficit

By: Eddie van der Walt

London 10/04/2013 - Base metals were mostly firmer in early trading on the LME on Wednesday after the release of a surprise Chinese trade deficit.

With imports up 14 percent in March from a year ago and exports up just 10 percent, the country swung to a deficit of $884 million from a surplus of $15.3 billion in February.

This was also far below the expected a surplus of $15.2 billion. It was the first deficit in more than a year and only the fourth since the global financial crash in 2008.

While the data also showed that copper imports rose 6.7 percent to 319,603 tonnes last month, this had little price impact - SHFE stocks of the red metal were already near an all-time high.

"The base metals market will take this trade data with a pinch of salt," Phillip Futures investment analyst Ker Chung Yang said. "The impact of rising copper imports is neutral against the backdrop of historically high inventories in Shanghai."

Copper prices in London were under slight pressure from profit taking this morning after the market closed above $7,600 per tonne yesterday for the first time in two weeks but the rest of the metals were in positive territory.

Fuelling the rally were a sharp drop in US wholesale inventories - which could lift metals demand via restocking - and confirmation that Chile was hit by a one-day national strike that which halted operations at all of state-run Codelco's divisions, causing a loss of about 5,000 tonnes of refined copper output.

Data to follow later today includes February French and Italian industrial production figures, the latest US Federal Reserve FOMC meeting minutes and the March federal budget balance.

In wider markets, the dollar continues to soften after last week's sub-par US jobs data, with the euro gaining about a third of a cent against the greenback to 1.311.

In equities, the FTSE is up more than 0.5 percent and the Hang Seng added 0.7 percent. The Dax and the CAC-40 are both also almost one percent higher.


Copper was last $12 lower at $7,614 per tonne. Stocks increased a net 375 tonnes to 587,925, tonnes, with Incheon Port in South Korea accepting 1,200 tonnes. Cancelled warrants increased 5,175 tonnes to 156,975 tonnes.

CRU believe that the metal faces a sea change in 2015 when substantial new supply bites and prices enter a period of weakness, copper group manager Vanessa Davidson said on Tuesday. European producer Aurubis, meanwhile, forecasts copper at $7,500-8,000 this year.

Aluminium edged $4.75 higher to $1,923.75 after stocks fell 250 tonnes to 5,202,900 tonnes. An influx of 6,825 tonnes in Vlissingen was outbalanced by outflows elsewhere, including Detroit, where 2,975 tonnes left warehouses. Cancelled warrants increased 2,575 tonnes to 1,974,375 tonnes.

Zinc was last at $1,929, up $15 per tonne. Inventories fell 8,175 tonnes to 1,133,650 tonnes, with 2,000 tonnes leaving Antwerp and 2,650 leaving New Orleans. Cancelled warrants rose 8,175 tonnes to 669,700 tonnes.

Nickel gained $91 to $16,315 although stocks rose 912 tonnes to 167,700 tonnes and cancelled warrants fell 1,338 tonnes to 22,956 tonnes.

Lead at $2,108.25 was up $18.25, with stocks slipping 150 tonnes to 260,250 tonnes, and tin was $50 higher at to $22,975 after a 25-tonne drop in stocks to 14,425 tonnes.

Steel billet was quoted at a little changed $185/300, while in the minor metals molybdenum was offered at $26,500 and cobalt was bid at $25,000. There were no stock movement in any of the three.

(Additional reporting by Gregory Holt, editing by Mark Shaw)