London 17/05/2012 - Base metals stalled after an early across-the-board run-up during Thursday LME premarket trading, with a sideways pattern developing as the market looked to consolidate the mini technical bounce that lifted prices away from multi-month lows.
"It is flat and quiet - there is a holiday [Ascension Day] in Europe. We are just moving up and down on the back of the euro," a trader said.
The euro, which has been under severe pressure as well this week, was more stable at some 1.2710 against the dollar, holding above Wednesday's four-month lows of 1.2678.
But further downward pressure is likely given that the current eurozone crisis has yet to reach its resolution, although the price declines this week, with metals hitting multi-month lows, may have flushed out much of the short-term liquidation.
"There is a bit of a lack of interest - particularly from the consumer side - at the moment," the trader said.
Macroeconomic uncertainty throughout the financial sector has been generated by the growing concerns of a Greek exit from the 17-strong eurozone, which would trigger further sovereign debt contagion.
This will keep the pressure on global financial markets ahead of fresh elections next month in Greece, which increases the likelihood of further investment-led disposal of risky assets.
Today's more stable tone in the metals was aided by other commodities, with both precious metals and crude oil steady. Traders said that yesterday's positive US data on metals-sensitive industrial production and housing starts also injected some support. Today, releases include the May Philly Fed Manufacturing Index, the April CB Leading Index and weekly unemployment claims.
There is also the potential of a pre-weekend short-covering rally should there be an upside reaction in the oversold euro if some better news emerges, traders added.
COPPER STYMIED AS INVENTORIES RISE
Copper tracked back to trade at $7,735 per tonne from highs around $7,775 but was still up $80 from Wednesday. Warehouse stocks rose a net 2,100 tonnes to 217,450 tonnes due to warrantings in Korean warehouses, which may be shipments from China.
Aluminium held at $2,044, up $9 and extending a recovery from the sell-off low of $2,007.50 hit yesterday. This was its weakest since late December - the market averted a test of sub-$2,000 levels.
Stocks rose 6,400 tonnes to 4,982,900 tonnes due to a 16,050-tonne warranting in Vlissingen.
In other metals, zinc was holding above $1,900 and yesterday's four-month closing low of $1,898, trading recently at $1,909. The uptrend in inventories was stemmed, with stocks falling 1,825 tonnes to 940,250 tonnes from what had been 17-year highs.
Lead was the exception to the general trend, easing to $1,963, an $8 loss and the lowest since January 9. Stocks fell 50 tonnes to 358,975 tonnes.
Tin was trading at $19,690, up $15 - stocks rose 100 tonnes to 14,355 tonnes, although there was a 28-percent leap in cancelled warrants to 4,125 tonnes.
Nickel business at $17,010 was up just $5 - inventories fell 66 tonnes. Steel billet held at $460/485 but inventories rose 65 tonnes to 28,145 tonnes.
In the minors, cobalt and molybdenum were indicated at $30,000/30,950 and $29,500/30,500 respectively.
(Editing by Mark Shaw)