London 15/03/2013 - Base metals continued sideways in Friday's premarket, little changed once again from the previous day’s closes but inching higher heading into early open-outcry sessions.
“Prices are consolidating the recent downward bias and slowly finding a footing,” a trader said. “We would look for prices to challenge overhead resistance but feel that they will remain intact.”
In data earlier this morning, eurozone CPI and core CPI data for February came in as expected at 1.8 percent and 1.3 respectively. The euro strengthened on this news - it was last at 1.3065 against the dollar ahead of closely watched data from the US due to release this afternoon.
“Market players are likely to [focus] on a series of economic data from the US. If these should turn out to be better than anticipated, the price recovery enjoyed by metals could receive an additional boost,” Commerzbank said in a note.
But some market observers feel that US inflation figures due later will not come in high enough to prompt the Federal Reserve to put the brakes on its quantitative easing measures.
“With the exception of nickel, which is looking quite steady, the other base metals are firm, but so far seem to be failing to catch the tailwind provided by good US data and buoyant equities. The metals all remain well placed to rally but if they cannot go up in this environment that could be taken as a warning flag,” FastMarkets analyst William Adams said.
In addition to the February US CPI, data scheduled includes March US Empire State Manufacturing Index, January US TIC long-term purchases, the February US capacity utilisation rate and industrial production figures as well as the March US preliminary UoM consumer sentiment index and inflation expectations.
METALS INCH HIGHER
Copper at $7,820.50 per tonne was $19.50 higher, largely ignoring another day of stock increases. LME warehouses now hold 525,825 tonnes of metal after a net rise of 3,575 tonnes.
Johor and New Orleans have been responsible for the bulk of the increases since the start of the week and today was no exception - Johor stocks climbed 2,075 tonnes to 149,500 tonnes and New Orleans 1,700 tonnes to 149,500 tonnes. Total cancelled warrants were down 200 tonnes at 33,050 tonnes.
Aluminium at $1,985 was $6 higher, while in the spreads June/July was showing a backwardation of $18.25/19.75.
“We would expect these spreads to remain volatile in the near term with the closes being particularly choppy as larger players battle out,” RBC Capital Markets said.
Inventories were just 125 tonnes higher at 5,173,075 tonnes, with drawdowns across many locations offsetting a 4,500-tonne increase in Vlissingen.
Nickel was the star performer yesterday when short-covering pushed the metal above its 200-day moving average. It has continued higher so far today - it was last at $17,311, up $114. Stocks dropped 102 tonnes to 161,544 tonnes and cancelled warrants were down 468 tonnes at 31,758 tonnes.
"However, nickel premiums are still falling, implying demand is still lacklustre in Europe and the US," ANZ said in a research note. "Given the mixed signals, it would be more prudent to wait until the cancelled warrants turns into physical outflows to confirm a bullish trend in the market."
Lead was last at $2,252, a rise $4.50, after stocks and cancelled warrants both fell 1,500 tonnes to 277,500 tonnes and 148,700 tonnes respectively. Zinc was also $4.50 higher at $1,980.5 after a 2,175-tonne drop in inventories to 1,204,550 tonnes, while cancelled warrants at 585,650 tonnes were down 4,550 tonnes.
Tin was $74 higher at $23,984. Inventories edged 15 tonnes higher to 13,775 tonnes but cancelled warrants were up 40 tonnes at 2,209 tonnes.
Steel was bid at $330 but not offered, while in the minor metals cobalt was indicated at $24,975/25,750 and molybdenum at $23,500/24,200.
(Editing by Mark Shaw)