LME MORNING - Metals range ahead of US jobs report, wary as euro tumbles

By: Martin Hayes

London 06/01/2012 - Base metals were trading sideways during Friday's LME pre-market sessions, with prices either side of Thursday closing levels, marking time ahead of early-afternoon December US jobs figures.

Equity markets in Europe were slightly higher, up around 0.3 percent, but the euro was struggling after hitting new 16-month lows against the dollar. It touched 1.2760 before settling recently at 1.2805.

Business in the complex settled down after an early flurry when caution took hold, although downside pressures abated.

"The one thing that has happened recently is that the numbers coming out of the US have been getting better, so the market is perhaps taking a bit of heart from that," a trader said.

Today's non-farm payrolls report, due at 13:30 GMT, is the week's key data event. It is anticipated that 152,000 jobs were created last month, with the unemployment rate coming in at 8.7 percent.

Yesterday, in a precursor to today's figures, ADP private-sector data showed 325,000 jobs were added last month against a forecast 176,000. Weekly fresh jobless claims at 372,000 were slightly better than an anticipated 375,000.

Despite modest stability, mostly led by copper where some fund interest and covering emerged on Thursday, the short-term picture remains uncertain.

Europe's economic problems and the knock-on impact on stock market and currencies remain as potential drags on prices, while the much-heralded fund rebalancing next week is also expected to result in choppy trading as the programmes are implemented.

"On balance the metals remain in sideways ranges. They tried higher at the start of the week before retreating in mid-week so all eyes will now be on where they end today," William Adams, analyst at FastMarkets, said.


COPPER INVENTORIES FALLING, NEARBY TIGHTNESS GROWS

Copper traded recently at $7,550 per tonne, up $10 from the steady Thursday close, with another decline in warehouse inventories seen - these fell a net 275 tonnes to 368,125 tonnes, a fresh low since December 2010.

Nearby dates remained tight, with cash/January trading at between $0.25 and $1.00 backwardation - at the start of this week the rate was $4.50 contango. TOM/next (tomorrow/next day) business was seen at level to $0.20 contango.

Aluminium rose $6 to $2,042. Inventories dropped 5,025 tonnes to 4,975,600 tonnes after more metal left the Vlissingen store - a net 1,500 tonnes - for the third day in a row.

In the spreads, the impact of the Dec/Jan tightness continues, with TOM/next trading from $4.00 to $1.00 backwardation.

Pending output curbs are not yet a significant factor in a heavily oversupplied market. Alcoa Inc and Rio Tinto Alcan plan to take about 435,000 tonnes per year of active primary aluminium capacity off-line over the next several months.

In other metals, zinc rose $17 to $1,850, with inventories down 825 tonnes at 820,075 tonnes. Lead traded at $2,000, down $5, although stocks fell 2,075 tonnes to 349,775 tonnes, the lowest since late September 2011.

Nickel business at $18,630 was down just $20, while inventories were unchanged at 89,838 tonnes. Tin dropped back to $19,700, down $105, although inventory drawdowns continued, with stocks falling 25 tonnes to 11,335 tonnes, a fresh low since April 2009.

Steel billet was trading at $535 against a previous $530/540 but prices have fallen since the start of the year - business was seen at $545 on Tuesday.

In the minors, cobalt was indicated at $31,250/31,900 and molybdenum at $29,000/30,750.


(Editing by Mark Shaw)

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