LME MORNING - Base metals rally picks up pace, copper price rises 1.8 pct

By: Kathleen Retourne

London 22/08/2013 - Base metals built on earlier gains in Thursday’s premarket, boosted by better-than-expected data from both China and the Eurozone.

The Chinese HSBC flash manufacturing PMI for August came in at 50.1 against a forecast 48.3 - the 50 level separates contraction from expansion.

“The Chinese economy would appear to be back on the road to recovery, which should be reflected in robust demand for metals and lend support to prices,” Commerzbank said.

And although the French flash manufacturing and services PMIs for August disappointed at 49.7 and 47.7 respectively, numbers from Germany and the eurozone as a whole were up. The flash manufacturing PMI for Germany came in at 52.0 and the eurozone number was at 51.3, while the flash services PMIS were 52.4 and 51.0 respectively.

These numbers helped offset concerns that the US will start to unwind its stimulus measures - the Federal Reserve is currently committed to purchasing $85 billion in new debt per month in an open-ended scheme.

In the minutes from the July meeting of the FOMC, “almost all committee members agreed that a change in the purchase program[me] was not yet appropriate [but] almost all participants confirmed that they were broadly comfortable” with moderating the pace of its securities purchases later this year.

“The Fed minutes planted a seed among investors that a measure of tightening lies ahead, but the deliberations were vague enough to make the timing somewhat iffy,” INTL FCStone analyst Edward Meir said.

The US will release unemployment claims and its flash manufacturing PMI later today.

Copper peaked at $7,389 and was last at $7,373 per tonne, still up $133. After yesterday’s sluggishness - just 10,300 lots changed hands on Select by kerb close - activity has picked up, with around 10,400 lots changing hands by 10:10 BST.

China imported 292,000 tonnes of refined copper in July, up 15 percent year-on-year, the National Bureau of Statistics (NBS) reported.

Inventories fell for the 27th consecutive day, down a net 1,425 tonnes to 565,500 tonnes, with cancelled warrants 2,900 tonnes lower at 294,450 tonnes.

Aluminium gained $15.50 to $1,912.50. Inventories fell 8,675 tonnes to 5,431,600 tonnes.

Nickel at $14,535 was up $110 although stocks are at fresh all-time highs, jumping 522 tonnes to 290,868 tonnes, while cancelled warrants rose 1,284 tonnes to 40,056 tonnes.

Lead jumped $31 to $2,244 - inventories fell 2,975 tonnes to 186,625 tonnes and cancelled warrants fell 2,775 tonnes to 87,500 tonnes. Zinc was up $24at $1,991, with stocks down 2,525 tonnes at 1,026,100 tonnes and cancelled warrants up 2,100 tonnes at 601,900 tonnes.

Tin rose $93 to $21,897, finding support from tightening nearby forward spreads. Cash/Sept-13 was last at a backwardation of $10, although this had traded out as wide as $50 backwardation earlier this week.  

Steel was indicated at $120/201, while both cobalt and molybdenum were neglected.

(Additional reporting by Lynette Tan, editing by Mark Shaw)