Base metals inch higher in thin trading conditions
Posted on January 9, 2013 by Kathleen Retourne
Base metals crept higher on Wednesday after the positive performance of Asian equities overnight fed through to European markets.
Sentiment also improved after aluminium producer Alcoa announced a fourth-quarter profit from continuing operations of $242 million but trading conditions were quiet, with market participants preferring to wait until the later part of the week before stepping in.
“The recoveries in China and the US means there is some room for higher prices in the short term as the market moves from destocking mode to a hand–to-mouth existence,” FastMarkets analyst William Adams said. “But the markets for now still seem to be adjusting to the volatility seen between the end of last year and the start of this year and consolidation remains the order of the day.”
Annual index reweighting is taking place this week – aluminium and zinc have felt the biggest impact, resulting in large trading volumes. But today has been comparatively quieter, with 2,777 lots of aluminium and 3,221 lots of zinc changing hands on electronic trading platform Select so far today. In comparison, almost 3,400 lots of copper have traded electronically.
“Given the ongoing annual re-balancing of the major commodity indices, market performance seems set to remain divergent in coming days,” Credit Suisse said.
In the eurozone, final GDP data came in as expected at -0.1 percent. This morning will also see the release of German industrial production, which is forecast to come in at 1.1 percent. In currencies, the euro was treading water at 1.3069 against the dollar.
Data is quiet this afternoon, with Thursday and Friday the main focus for the market. The Chinese trade balance, the ECB press conference and US job data are due on Thursday followed by the Chinese CPI and PPI on Friday.
METALS TICK HIGHER
Aluminium rose $11.50 to $2,079.50 per tonne on Tuesday’s close. Inventories fell a net 10,025 tonnes to 5,196,650 tonnes and cancelled warrants at 2,187,575 tonnes were down 12,400 tonnes.
Copper at $8,106 was up $26. Stocks dropped 1,675 tonnes to 329,050 tonnes and cancelled warrants fell 2,500 tonnes to 65,150 tonnes.
Zinc gained $13 to $2,033 despite an 8,000-tonne increase in stocks to 1,217,800 tonnes due to rises in New Orleans – metal held in this location now stands at 797,175 tonnes, of which 408,225 tonnes were cancelled warrants. Total cancelled warrants were up 825 tonnes to 611,125 tonnes.
Lead at $2,335 was up $7 – stocks and cancelled warrants both dropped 2,100 tonnes to 306,250 tonnes and 169,525 tonnes respectively. Total inventories are now at their lowest since October 22.
Nickel increased $85 to $17,410 after stocks fell 72 tonnes to 143,418 tonnes and cancelled warrants rose 534 tonnes to 15,750 tonnes.
Tin at $24,330 was $180 higher although stocks and cancelled warrants were stagnant at 12,705 tonnes and 3,140 tonnes respectively.
Steel was last at $320/339, while in the minor metals cobalt was indicated at $24,500/27,450 and molybdenum was offered at $27,000.
About Kathleen Retourne Kathleen has been reporting on commodity markets since 2006. She joined FastMarkets in 2011 and has immersed herself into the metal industry, specialising in LME coverage. View all posts by Kathleen Retourne ?
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CSD Price at posting:
8.8¢ Sentiment: LT Buy Disclosure: Held
