LME MORNING – Base metals prices mixed but risk-on stance grows

Base metals were mixed on the LME on Tuesday morning, with buying interest in commodities on the up ­- oil prices and equities are rebounding.

Risk appetite in global markets has improved since last Friday after the Bank of Japan introduced negative deposit rates and China’s central bank governor said he saw no basis for a continued depreciation in the yuan.

Sentiment was further boosted after European Central Bank president Mario Draghi suggested in the European parliament hearing on Monday that it will provide further stimulus to boost eurozone growth and inflation.

“There is a general sense that recent market weakness is not justified by fundamentals,” Credit Suisse said.

The Brent crude spot price surged to its highest in a week after the world’s two largest crude producers, Saudi Arabia and Russia, agreed to freeze oil output at January levels after talks in Qatar today. Qatar and Venezuela also agreed to freeze production. Spot Brent crude was last higher at $35.26 per barrel.

“With crude oil prices rising again, buying interest in commodities may pick up. China’s strong new loans data also look encouraging,” FastMarkets head of research William Adams said.

New loans of 2.51 trillion yuan were up from 597.8 billion yuan in December. As well, M2 money supply rose 14 percent year-on-year in January, above market expectations of 13.5 percent.

“The new loans may have been increased as the government prepares to provide more stimulus aimed at underpinning economic growth,” Adams noted.

Elsewhere, the Italian trade balance at 6.02 billion euros was better than expected. German ZEW economic sentiment beat the forecast at 1.0 as did eurozone ZEW economic sentiment at 13.6.

Data from the US today includes Empire state manufacturing index and US NAHB housing market index.

According to today’s LME warehouse data, aluminium and zinc stocks in LME-listed warehouses both jumped ahead of ‘Third Wednesday’, when the February date becomes prompt.

Aluminium stocks rose a net 55,800 tonnes to 2,803,450 tonnes and zinc inventories rose 40,900 tonnes to 499,625 tonnes.

Copper was last at $4,562 per tonne, unchanged from Monday’s close. In subdued trading, more than 4,000 lots have changed hands on Select so far.

Copper stocks fell 4,000 tonnes to 214,300 tonnes and cancelled warrants dropped 6,425 tonnes to 43,075 tonnes.

Aluminium at $1,521 climbed $10 and nickel at $8,295 was $25 higher. Stocks of the latter fell were down 714 tonnes to 438,402 tonnes and cancelled warrants dropped 474 tonnes to 162,006 tonnes.

Zinc at $1,667 was down $18 and lead at $1,814 was $16 lower. Lead stocks climbed 825 tonnes to 182,225 tonnes.

The global refined lead and zinc markets were oversupplied by 63,000 and 123,000 tonnes respectively last year, according to the International Lead and Zinc Study Group (ILZSG).

Tin recently traded at $15,250, down $55. Stocks and cancelled warrants both fell 180 tonnes to 4,085 tonnes and 690 tonnes respectively. Steel, cobalt and molybdenum were neglected,

(Additional reporting by Vivian Teo and Kathleen Retourne, editing by Mark Shaw)