LME MORNING - Most metals track euro off lows but tin slips to fresh three-month low

By: Kathleen Retourne

London 17/04/2012 - Base metals were stuck around yesterday’s closing levels on Tuesday morning. Although most came of their lows, all bar nickel and aluminium remained stuck in negative territory and tin has slumped to a fresh three-month low.  

The complex has been largely tracking the euro, which has made a slight improvement to 1.3156 against the dollar after dropping yesterday to 1.2993, its lowest in almost three months.

Sentiment is still shaky, however, and concerns regarding Spain’s economic stability are still very much determining investor actions.

“Negative signs continue to dominate this morning. In technical terms the situation on the metal markets is still troubled, and prices are likely to remain under pressure for the time being,” Commerzbank said.

Yesterday, markets remained under pressure from weekend newsflow but managed to recover slightly, encouraged by better-than-expected US retail sales numbers. But trade turned volatile after the subsequent US Empire manufacturing index reading disappointed.

"The latest conflicting economic news flow will probably continue to trigger erratic trading," broker Credit Suisse said. "For metals to exit the current erratic trading pattern, more consistent economic data would be needed. Accordingly, today’s numbers will be watched very closely."

The economic agenda today includes UK and EU price data, German and EU ZEW economic sentiment and US building permits, housing starts, industrial production and utilisation data.

But investors will also closely watch Spanish bond auctions later this week and next week's Fed policy meeting, seeking cues on the central bank's attitude towards new quantitative easing measures after last week's weaker employment numbers.


ALUMINIUM, ZINC STOCKS JUMP

Aluminium at $2,084 per tonne was up $19, while nickel at $17,750 was up $250. Inventories jumped this morning, rising 34,625 tonnes to 5,079,900 tonnes, due to a large warranting in Detroit at 40,750 tonnes. This took total stocks in this location to 1,453,800 tonnes, of which 629,325 tonnes are cancelled warrants.

Vlissingen stocks have been declining steadily since the LME introduced its new minimum load-out rate rules on April 1 - they fell a further 3,000 tonnes today, taking total stocks to 1,032,125 tonnes.

Cancelled warrants at 1,694,950 tonnes were also up considerably, rising 39,500 tonnes - they rose 38,325 tonnes in Detroit, taking total cancelled warrants to 629,325 tonnes there.

Nickel stocks at 98,856 tonnes were down 474 tonnes, while cancelled warrants declined to 4,698 tonnes.

Copper is stuck in negative territory at $7,974, down $6 on Monday's close. Tightness is still evident in the spreads, with Cash/May at $43/55 backwardation.

Stocks fell 625 tonnes to 261,075 tonnes, with Chicago, New Orleans and St Louis warehouses seeing a 1,450-tonne drawdown. But stocks in Gwangyang and Busan in South Korea have risen 1,300 tonnes and 200 tonnes respectively and Singapore saw an increase of 300 tonnes.

Zinc was $1 lower at $1,997. Stocks saw a notable increase, rising 10,250 tonnes to 912,150 tonnes - the largest since May 18, 1995.

Detroit was responsible for the rise - a 9,250-tonne increase took the total there to 93,125 tonnes, while stocks in Port Klang, Malaysia, climbed 1,200 tonnes to 89,275 tonnes. Cancelled warrants at 17,675 tonnes were down 925 tonnes.

In other metals, lead turned lower, dropping $1.50 to $2,076.50, while stocks fell 474 tonnes to 371,450 tonnes and cancelled warrants dropped 100 tonnes to 23,575.

Tin at $20,968 is the day's worst performer so far, down $432 and at its weakest since January 16. Stocks were up 35 tonnes to 13,275 tonnes and cancelled warrants at 885 tonnes were down five tonnes.

Steel was indicated at a steady $505/518, with stocks and cancelled warrants unchanged from yesterday at 30,160 tonnes and 3,380 tonnes respectively. In the minor metals, cobalt traded at $30,500 and molybdenum was quoted at $30,500/32,000.


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

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