London 17/07/2013 - Base metals were content to tread in well-worn ranges on Wednesday, as the complex passed time ahead of the Fed chairman Ben Bernanke's testimony to congress later today.
"The base metals seem well positioned to head higher if Fed talk is dovish and the markets still feel oversold and vulnerable to short-covering," said FastMarket analyst William Adams.
"That said, if the market is left with the impression that QE will start being reined in from September we should be braced for further weakness. Our concern is that QE tapering may not affect the US, which is starting to see a pick-up in private sector growth, as much as it affects emerging markets."
"Markets will continue to watch closely for his assessment of the economy and renewed indications regarding pace and timing of tapering and the interest rate outlook," added Credit Suisse. "He is likely to again strike a fairly dovish tone, in-line with his remarks last Wednesday, which visibly eased market concerns regarding the policy outlook."
Currencies saw the euro last trade at $1.3144, slightly lower than the previous close of $1.3150 as the dollar made some gains ahead of the Bernanke testimony.
In data, Chinese June CB Leading Index rose to 1.0 percent from 0.3 percent last month, while June foreign direct investment climbed to 4.9 percent from 1.0 percent in May on a year-to-date-on-year basis.
Data releases scheduled for Wednesday include June US building permits and housing starts as well as the latest US Fed Beige Book.
ALUMINIUM AND ZINC STOCKS JUMP
Copper broke above the physiologically important $7,000 per tonne level yesterday afternoon and has touched it several times since, but struggled to close or hold at that level. After peaking at $7,046 in Asian sessions today, it has since come back under pressure, last at $6,925 per tonne – a $73 loss on the previous day’s close.
But copper prices were additionally weighed by strong output in the second quarter from two of the world's biggest miners of the red metal. BHP Billiton said it produced 333,200 tonnes of copper in the three months ended June, beating the analyst forecast of 322,000 tonnes, while Rio Tinto's second-quarter copper output climbed 10 percent to 146,200 tonnes from the same period a year earlier.
However, Commerzbank reported that estimates by state research institute Antaike, China’s demand for metals will remain robust even if the country’s economic growth slows.
Driven by increased demand from electronics manufacturers, the construction sector, the power generation industry and wire manufacturers, Chinese copper demand this year is expected to climb by 5.5 percent year-on-year to 8.1 million tonnes
Volumes have been swift with around 13,000 lots changing hands on Select so far. Inventories were little changed, with a net 600-tonne drawdown to 641,225 tonnes.
Aluminium at $1,806 lost $9, while turnover has been insignificant with only 2,000 lots changing hands. Inventories hit a fresh all-time high, jumping 13,400 tonnes to 5,486,100 tonnes after Detroit boosted stocks by 18,400 tonnes.
Zinc slipped $22 at $1,866, while it saw stocks soar by 75,900 tonnes to 1,077,225 tonnes – the highest since June 19. New Orleans was responsible for the uptick with stocks here jumping 77,575 tonnes to 662,225 tonnes.
Sister metal lead at $2,053 was down $22 while inventories and cancelled warrants were both down 25 tonnes at 196,875 tonnes and 107,975 tonnes respectively. Nickel was $18 lower at$13,752 wjo;e stocks lost 300 tonnes to 195,774 tonnes.
Tin at $19,435 saw a $20 loss although stocks lost 50 tonnes to 14,305 tonnes.
Steel at $110/210 saw a 2,080 tonne drawdown in stocks and cancelled warrants at 71,760 tonnes and 55,770 tonnes respectively.
In minor metals, cobalt was indicated at $28,500/29,975 tonne while molybdenum was neglected.
(Editing by Eddie van der Walt)