London 21/08/2013 - Base metals remained under pressure in Wednesday’s premarket, drifting into the negative territory ahead of the release of the minutes from the Federal Open Market Committee's July meeting.
Yesterday, the metals initially lost ground but regained their footing after the dollar dipped to a six-month low against the euro, traders said.
The dollar bottomed out at 1.3452 against the euro yesterday, its softest since February 14, but it has since recovered somewhat to 1.3391.
"Generally, after the recent rallies prices seem to be consolidating but the fact the dips were bought into yesterday suggests the rebounds may just be pausing rather than being over," FastMarkets analyst William Adams said. "Much will now depend on what spin the FOMC meeting minutes have on the tapering timetable."
The FOMC will release the minutes of its July meeting today, which will be scrutinised for hints on the longevity of quantitative easing. According to consensus, the US central bank will start to unwind its stimulus efforts - currently worth $85 billion per month - from next month.
"If the market senses that tapering is likely to be delayed or only started at a slight rate, the markets could well move higher," Adams said.
In data today, China’s CB leading index for July came in at 1.4 percent against the previous month’s 0.8 percent - revised from 1.0 percent - but these numbers were largely ignored while attention is fully focused on the US.
The only major US macro data scheduled for release today is July existing home sales, expected at an annualised 5.1 million units.
In the metals, copper was down $48 at $7,272 per tonne, with volumes slight - by 10:00 BST, around 3,250 lots had traded on Select. Stocks fell once more, with a net 5,600-tonne decrease taking the total to 566,925 tonnes.
Aluminium was $3.50 lower at $1,911 after stocks and cancelled warrants both fell 7,150 tonnes to 5,440,275 tonnes and 2,042,400 tonnes respectively.
Nickel fell $82 to $14,678, with inventories climbing 768 tonnes to 209,346 tonnes. Tin drifted $70 lower to $21,925, with stocks edging 30 tonnes higher to 13,695 tonnes and cancelled warrants down 155 tonnes at 4,090 tonnes.
Lead fell $19.25 to 2,228.25 and sister metals zinc dropped $12.25 to $1,976.25. While zinc stocks fell 3,550 tonnes to 1,028,625 tonnes, lead inventories rose 3,575 tonnes to 189,600 tonnes.
"According to data from the International Lead and Zinc Study Group (ILZSG), the global lead market showed a supply deficit in June, meaning that the trend observed in recent months is continuing," Commerzbank said in a note.
Steel was last quoted at $120/201 and cobalt at $26,350/27,500 while molybdenum was neglected. There were no changes in stocks across all three contracts.
(Editing by Mark Shaw)