LME MORNING - Metals cheered by manufacturing data, prices set multi-week highs

By: Martin Hayes

London 03/06/2013 - Base metals were firm across the complex during Monday LME premarket trading, consolidating a mini-upsurge that kicked off the fresh month and lifted prices to either multi-week or multi-month highs, traders said.

Sentiment was initially underscored by China's better-than-expected PMI, while the European equivalents were equally positive although they were below the 50 level that splits contraction from expansion.

"Mid-May appears to have marked a low in base metals prices with a good recovery now seen across the complex," John Meyer of broker SP Angel said.

Reports also circulated that China's SRB had made purchases of nickel, as well as expressed interest in copper.

"Chinese buying generally returns to the market within weeks of the New Year.  This year has seen a slower return as the new leadership adjusts its policies and cracks down on corruption," Meyer noted.

Copper rose to its highest for just over one week, aluminium hit a six-week peak, lead jumped to its highest for two-and-a-half months, zinc to a one-and-a-half month best and nickel a six-week high.

"With corrections underway in equities and bonds, we would not be surprised by some more rotation into the metals," William Adams of FastMarkets said.

The impetus for the gains came from China's official manufacturing PMI for May, which came in on Saturday at 50.8 - above the forecast of 49.9 and an increase from 50.6 in April.

In the raft of European numbers that then followed, Germany, France, Spain and Italy recorded PMIs of 49.4, 46.4, 48.1 and 47.3 respectively. The eurozone's PMI was 48.3.

Equity markets were sluggish this morning, while the euro was holding at a steady 1.3020 against the dollar.

This afternoon, the emphasis switches towards the US - as well as the PMI, metals-sensitive April construction spending figures and May total vehicle sales data are due for release.

Last week's US data was relatively constructive, ending on Friday with UoM consumer sentiment came in at 84.5, above the expected 84.1 and the highest in six years. This week's keynote US data event will be Friday's non-farm payrolls report for May.


Copper rose as high as $7,397.75, its highest for just over one week, and then settled back at $7,365 per tonne, up $57 from Friday's kerb close. Warehouse data also cooled the advance - stocks rose a net 8,775 tonnes to 617,225 tonnes due to an 11,900-tonne warranting in Johor.

Aluminium was trading at $1,925, up $19 but having backed away from a peak of $1,938, although the market is holding positively after a clear move above $1,900. Inventories were down 3,625 tonnes at 5,198,375 tonnes.

Lead rose to $2,222, its highest since March 15, and then traded at $2,215, up $14 - stocks were down for the 13th day in a row, falling 2,475 tonnes to 217,000 tonnes, a fresh low since January 2011.

Zinc at $1,942 was up $15, not far off the $1,949 intraday high, which was the strongest since late-March. Stocks were down for the ninth successive day, falling 475 tonnes to 1,086,350 tonnes.

In others, nickel touched $15,600, the strongest since mid-April, and then settled back at $15,180, up $360 - stocks were up 276 tonnes at an all-time high of 180,072 tonnes. Tin traded at $21,017, up $117 - inventories fell 25 tonnes to 13,910 tonnes.

Steel billet was indicated at a wide $155/180, while in the minors cobalt was quoted at $28,800/29,800 and molybdenum was neglected.

(Editing by Mark Shaw)