London 19/06/2013 - Base metals traded at mostly steadier levels during Wednesday's LME premarket, having corrected modestly following another sell-off in the previous session, traders said.
Momentum slowed, however - the earlier tentative bounce was replaced by a more-cautious tone ahead of the outcome of the much-anticipated US FOMC monetary policy agenda-setting meeting tonight.
Broker Commerzbank said that trade is likely to be uneven in the run-up to its decision on interest rates and subsequent statement made by the Federal Reserve.
In the metals, copper was above the seven-week lows set on Tuesday, while nickel and aluminium were above yesterday's respective four-year and one-month lows
A firmer euro helped to alleviate some of the downside bias that was evident yesterday - the single currency was around 1.3395 against the dollar, standing not far off the four-month peak of 1.3415 set on Tuesday.
"Global commodity markets are just like any other market and are currently being driven by the guessing game of ‘if’ and ‘when’ the US Federal Reserve may decide to begin stepping away from its asset purchase programme," broker Saxo Bank said.
Although the US central bank is expected to keep ultra-low interest rates unchanged, any hint in its policy statement that it is considering tapering stimulus measures would have an impact on commodity prices.
Apart from the outcome of the FOMC meeting, which will be after the LME closes this evening, there are no other potentially market-moving events scheduled, neither is any frontline data due.
This is likely to see metal prices ranging amid positioning and booksquaring throughout the day. On Thursday, the June HSBC Flash Manufacturing PMI for China will be issued - this, as well as the impact of the FOMC, is likely to be a key influence on business tomorrow.
INVENTORY SURGES FOR COPPER, ALUMINIUM AND LEAD
A continuation of this week's warehouse inventory increases in key metals was seen - these were partly due to 'Third Wednesday' considerations but also emphasised that metal-related fundamentals in the summer period are soft.
Copper was trading at $7,011 per tonne, up $6 still but below the $7,040 high. On Tuesday, prices hit $6,965, the lowest since May 3.
Today's net 6,175-tonne increase in stocks lifted the total to 638,325 tonnes, the highest since July 2003, due to a 7,575-tonne warranting in Johor. But cancelled warrants - metal booked and queuing for delivery - jumped 22,975 tonnes to a record 249,000 tonnes.
Aluminium relinquished gains to trade at $1,838, a $3 loss. Stocks soared 66,100 tonnes to a fresh all-time peak of 5,414,250 tonnes, with 59,875 tonnes warranted in Vlissingen. In three days, total stocks have jumped 194,425 tonnes.
But cancelled warrant levels are also rising - today they climbed 31,950 tonnes to 2,156,400 tonnes, the highest for six months.
Lead edged back below $2,100 to an unchanged $2,090 - its broad inventory downtrend was interrupted. Stocks jumped 15,575 tonnes to 204,625 tonnes, a two-week high - 20,200 tonnes were warranted in Johor.
Zinc was up just $1 at $1,859 - inventories were down for the eighth day in a row, falling 3,550 tonnes to 1,078,025 tonnes.
Nickel was unchanged at $14,150, managing to remain above the key $14,000 level. On Tuesday, prices fell to $14,037. After Tuesday's big stock increase, inventories were down 60 tonnes from what had been record highs to 185,688 tonnes.
Tin hit $20,000, down $75 and another seven-week low, while inventories were down 85 tonnes at 14,300 tonnes. Steel billet was indicated at a wide $140/180, with stocks down 65 tonnes at a six-month low of 76,115 tonnes.
In the minors, cobalt was quoted at $29,500/30,700, while molybdenum was neglected.
(Editing by Mark Shaw)