Base metals strong but ease back from highs, eurozone data weighs

London 10/12/2012 - Base metals rose in start-of-week trading, with several hitting multi-week highs, boosted by positive Chinese data over the weekend. But disappointing eurozone numbers and a softer euro capped gains. This morning, the German trade balance disappointed at 15.2 billion euros against a forecast of 15.9 billion euros, while French and Italian industrial production at -0.7 percent and -1.1 percent respectively were also under par. Sentix investor confidence at -16.8 undershot the expected -16.2. The euro stepped back to 1.2902 against the dollar, down around a fifth of a cent. And in Italy, Prime Minister Mario Monti’s pledge to tender his resignation once the Italian government has approved the 2013 budget has unsettled markets and pushed up the country’s borrowing rates. But Chinese data largely exceeded expectations. November industrial production grew by 10.1 percent year-on-year, beating the forecast of 9.8 percent as well as October's reading of 9.6 percent growth. The CPI at 2.0 percent was below the forecast 2.1 percent and the PPI at -2.2 percent undershot the expected -2.0 percent. Chinese exports in November increased 2.9 percent to $179.4 billion but imports were unchanged from the previous month at $159.8 billion. “Despite some negative aspects in this data, we see a net positive for metal prices. The low CPI and PPI numbers suggest there is more room to ease monetary policy to support economic growth if needs be,” FastMarkets analyst Jono Remington-Hobbs said. In metals-specific data, copper imports in November rose 13.5 percent month-on-month to 365,331 tonnes. "October’s low numbers may have been exacerbated by a temporary disruption in Chilean exports. Since then, a more favourable import price ratio has boosted import flows," broker Barclays Capital said. “As we have noted, however, imports continue to pile up in bonded warehouses, as physical demand has yet to pick up strongly.” There are no important US data releases today. METALS OFF HIGHS BUT STEADY Copper peaked at $8,148, its highest since October 19, before settling at $8,128.75 per tonne, up $93.75 on the Friday’s close. Inventories rose a net 3,850 tonnes at 259,050 tonnes due to an increase at New Orleans, while cancelled warrants at 29,350 tonnes fell 600 tonnes. Aluminium was last at $2,106.25, up $17.25, but back from its intraday high of $2,115. Dec/Jan tightness has eased slightly - the spread was last in a backwardation of $13.50, having widened to $28 back last week. In stocks, increases at Vlissingen and Singapore of 6,400 tonnes and 2,400 tonnes respectively were offset by drawdown across several locations, most notably 5,100 tonnes from Detroit. Total stocks now stand at 5,186,825 tonnes, down 275 tonnes. Cancelled warrants were 12,475 tonnes lower at 1,710,775 tonnes. Lead jumped to $2,272.50 before settling at $2,263, still up $48, after stocks fell 2,000 tonnes to 354,925 tonnes due to removals from Antwerp. This location now holds 84,375 tonnes, of which 63,950 tonnes are cancelled warrants. Total cancelled warrants at 163,800 tonnes were down 2,000 tonnes. Sister metal zinc was up $21 at $2,069 - stocks and inventories were both down 2,700 tonnes at 1,231,125 tonnes and 637,975 tonnes respectively. Nickel gained $225 to $17,450, with stocks down 534 tonnes at 138,024 tonnes and cancelled warrants falling 1,176 tonnes to 15,816 tonnes. Tin climbed $450 or 2.0 percent to $22,225 - its highest since October 8. Steel was last at $325/340 after inventories and cancelled warrants both fell 2,015 tonnes to 61,815 tonnes and 13,455 tonnes respectively. In the minor metals, cobalt was indicated at $23,500/27,450 and molybdenum at $24,750/26,000.

Courtesy: FastMarketLtd