Base metals prices edge higher, sentiment picks up slightly – LME MORNING

Base metals prices were slightly higher but largely consolidating in LME premarket trading on Wednesday, with improved data and newsflow lifting sentiment a touch.

“The base metals look stronger than they did yesterday, with aluminium, copper, lead and tin looking brighter… we feel the metals are seeing some counter-trend moves but we would expect rallies will continue to be sold into, although the likes of nickel and tin still feel oversold,” FastMarkets’ William Adams said.

The rally in US markets overnight was triggered by talk that the European Central Bank (ECB) is considering a quantitative easing (QE) programme to boost the bloc’s economic recovery through the purchase of corporate bonds.

Global equity markets are broadly higher this morning positive earnings results from Apple and Texas Instruments, while the euro was at a little changed 1.2696 against the dollar and ranging narrowly either side of 1.27.

The other key development yesterday was the release of China’s third-quarter GDP growth figure, which at 7.3 percent was better than the forecast 7.2 percent but below the reading of 7.5 percent in the second quarter and the weakest growth rate in close to six years.

This afternoon, the US economic data due for release comprises CPI figures and oil inventories, so the metals complex may well trade narrowly ahead of more-important Chinese and US releases in the last two days of the week.

As well, investors will await the all-important HSBC flash PMI tomorrow for direction.

“Sentiment [here] at LME week will hold the key to price direction in coming weeks for industrial metals,” broker ANZ said.

Traders attending events surrounding Tuesday evening’s annual LME dinner said that sentiment was cautious, but perhaps becoming less burdensome.

“The LME volumes are up – so there is business going on and people are not deserting the sector. Prices are not great but we are not in bear-market mode either,” one senior trader said.

In the metals, copper at $6,687 per tonne was up $19 in price on Tuesday’s close and recovering from off last week’s six-month low of $6,530. Warehouse stocks fell a modest net 100 tonnes at 157,525 tonnes, while cancelled warrants are down 100 tonnes at 26,025 tonnes

In others, aluminium gained $14 to $2,005, with stocks dropping 14,425 tonnes to 4,482,925 tonnes. Of this stockpile, 2,666,000 tonnes are booked for removal and unavailable.

Nickel has recovered modestly from an earlier slump this week when prices hit a new seven-month low of $15,080 – it was last at a price of $15,351, up $51. Inventories reversed the recent higher trend to record highs, slipping 126 tonnes today to 377,010 tonnes.

The zinc price at $2,224 was up $14 after a 2875-tonne stock fall to 717,050 tonnes while lead was up $10 at $2,039 after stocks slipped 25 tonnes to 224,675 tonnes.

Tin at $19,525 is up $80 – it continues to correct from last week’s slide to 15-month lows. Inventories were also flat at 9,155 tonnes while cancelled warrants rose 30 tonnes to 595 tonnes.

In the minors, cobalt and molybdenum prices were neglected.

(Additional reporting by Martin Hayes, editing by Mark Shaw)