FS: Base metals rise across the board as correction falters, solid euro supports
London 17/12/2010 - Base metals continued to punch higher during Friday morning LME business, arresting the correction of recent days and helped higher by a firmer euro.
Bellwether copper rose 2.1 percent to an intraday peak of $9,175 per tonne this morning before settling at $9,088.50, a $97.50 rise. All six primary metals have risen in morning business, many of which had posted multi-day troughs in the previous session.
"Copper is being bought for investment and strategic purposes... [with] prices rising strongly despite traders winding down for Christmas," analyst John Meyer of Fairfax noted.
"The price rise now indicates significant potential for further strength into the new year," he added.
A stronger euro versus the dollar provided the base metals with solid support this morning, hitting 1.3358 before settling at 1.3311, almost three quarters of a cent higher.
Data this morning from the region was positive - German Ifo business climate numbers for December came in at 109.9, above an expected 109.2 and rising from 109.3 previously. And the EU trade surplus rose to 3.6 billion in October, above expectations of 2.9 billion, although the previous figure was downwardly revised to two billion.
CB leading indicator figures from the US are due for release later today.
EU leaders agreed overnight to introduce a permanent financial safety mechanism from 2013 onwards - a two-day summit to discuss the issue of sovereign default in the region is due to conclude today.
However, worries of debt contagion remain for the short-term remain. Moody's cut Ireland's credit rating five notches to Baa1, while Greece - like Spain earlier in the week - has been placed on review for a possible downgrade.
Copper stocks rose for a fifth successive day on Friday, reflecting ongoing technical tightness. Inventories rose a net 600 tonnes overnight to 361,400 tonnes. Cancelled warrants - the metal earmarked for removal - fell 150 tonnes to 18,550 tonnes, their lowest since December 6.
However, recent tightness appeared to be easing - cash/threes was at a $35/45 backwardation this morning compared with $70 earlier this week, while TOM/next was at a $1.00 premium.
Aluminium was last at $2,341 per tonne, up $23 - inventories fell 1,700 tonnes to 4,287,600 tonnes, while cancelled warrants rose 4,500 tonnes to 232,025.
Nickel stocks climbed to their highest since June 14 - up 444 tonnes to 131,862 tonnes - although the increase was offset today by a 15.4 percent jump in cancelled warrants, up 125,382. It was last trading at $24,713, up $13.
Zinc advanced $46 to $2,266 per tonne - LME stocks rose 275 tonnes to 699,450 tonnes overnight. Sister metal lead was at $2,380.50 per tonne, a $10.50 rise - inventories dropped a net 175 tonnes to 207,600 tonnes after reaching a ten-and-a-half-year peak yesterday.
Tin, at $26,200 per tonne, was $100 higher. Stocks fell 70 tonnes to 15,820 - they had reached their highest since July 19 in the previous session.
Steel billet was last indicated at $542/549 per tonne against $542/547 yesterday. LME inventories remained flat at 57,720 tonnes. Cobalt stocks are at their loftiest since August 31 after rising a net 16 tonnes to 223 tonnes. The market was at $37,500/39,000, down $400.
Molybdenum was last seen at $35,250/37,500 per tonne versus the previous day's close of $35,250/37,500. Stocks remained unchanged at 288 tonnes.
