LME MORNING - Metals higher on mood pick-up, consolidate gains

By: Martin Hayes

London 19/11/2012 - Base metals traded at higher levels during Monday's LME premarket, holding around intraday highs and capitalising on the pick-up in sentiment in wider markets against the background of an upturn in the euro against the dollar.

Gains were not significant, however, with prices undergoing another gyration in the well-established ranges that have developed over the past week, which has resulted in the current pattern of neutral technical trading.

"The base metals have generally held up well, some better than others. But having paused recently, they look well placed to move higher again," William Adams of FastMarkets said.

As well, the mood was not dispelled by big warehouse inventory increases in some of the metals, which were partly reflective of today's November 'third Wednesday' prompt date. Trading against this cash position takes place in the official rings.

Elsewhere, the euro was trading around 1.2765, up from near 1.2700 late on Friday and above recent two-month lows of 1.2659, ahead of Tuesday's eurogroup meeting, with Greece again in focus.

Sentiment in the complex remains overshadowed by the global macroeconomic uncertainties that show little immediate sign of being resolved - eurozone sovereign debt, the fast-approaching deadline for the US budgetary fiscal cliff and the implications of China's once-in-a-decade leadership change.

On the data side, Friday's metals-sensitive US figures did little to boost confidence - both the October industrial production outturn and capacity utilisation rate came in below forecast.

US data releases scheduled later include October existing home sales and the November NAHB Housing Market Index. The US economic diary this week will otherwise be light ahead of Thursday's Thanksgiving Day holiday. For the metals, this could see further sideways trading in low volumes, traders said.


Copper briefly tested levels above $7,700 before settling at $7,695 per tonne, a $90 advance from the Friday close, with the market holding around the top end of its current neutral range. Selling has been seen on excursions above $7,700, while support is encountered on dips towards $7,550.

In warehouse stocks data, inventories fell a net 1,125 tonnes from what had been the highest since early-July to 254,050 tonnes.

Aluminium business at $1,955 was up $4. Stocks were up 1,875 tonnes at 5,107,300 tonnes, the highest since late February - in Detroit, 6,550 tonnes were warranted, taking the total there to 1.405 million tonnes, still exceeding the amount stored in Vlissingen. Today, 3,000 tonnes were registered there, bringing the total to 1.363 million tonnes.

In other metals, zinc was $13 higher at $1,933, although the 15,700-tonne increase in stocks lifted the total to a near-18-year high of 1,176,675 tonnes. The jump was due to a 12,175-tonne warranting in New Orleans and 6,750 tonnes warranted in Antwerp.

Lead traded at $2,174, up $24 - stocks rose 6,750 tonnes to another four-month high of 339,000 tonnes, with 9,850 tonnes placed on warrant in Johor. Metal is also being registered against the tight November date. Cash/November traded at $4.00 backwardation this morning.

Nickel rose to $16,130, up from Friday's $15,975 - there was a 246-tonne fall in stocks to 132,636 tonnes. Tin was just $95 higher at $24,495, with inventories falling 20 tonnes to 11,455 tonnes.

Steel billet was quoted at $332/345, although stocks rose for the first time in one month - up 910 tonnes at 89,180 tonnes.

The minor metals were neglected but cobalt stocks fell one tonne to 425 tonnes.

(Editing by Mark Shaw)