London 11/12/2012 - Base metals stepped back from earlier session highs on Monday morning when profit-taking crept into the market and pulled prices lower. But with the exception of tin and copper, metals remain holding in positive territory.
“Following the sharp price increases in recent weeks, we are initially seeing moderate profit-taking this morning,” Commerzbank said.
Data this morning has been mixed. Chinese new loans disappointed at 523 billion yuan against a projected 550 billion yuan and M2 money supply at 13.9 percent was below the expected 14.2 percent.
Meanwhile, in the eurozone, German and EU ZEW economic sentiment were both positive at 6.9 and 7.6 respectively. The euro was fairly steady at 1.2965 against the dollar.
Overall, financial markets look set to mark time to some extent today, ahead of the US Federal Reserve's FOMC meeting and policy announcement on Wednesday, where chairman Ben Bernanke will update on the economy and is widely seen announcing further monetary easing policies.
The Federal Open Market Committee (FOMC) is seen rolling out a fresh bond-buying effort that will replace 'Operation Twist', which is set to expire at the end of the year.
Separately, concerns about the US fiscal cliff seemed to have eased - the market is increasingly hopeful of a resolution before the looming budget deadline, averting a package of growth-negative tax increases.
Later, US figures resume after a fallow Monday, with the October trade balance, the December IBD/TIPP Economic Optimism index, and October wholesale inventory figures to be released.
CONSOLIDATION MODE SETS IN
Copper was trading at $8,117 per tonne, a $23 loss from the previous close - on Monday the market hit $8,159, its highest since October 19. Warehouse stocks rose a net 2,675 tonnes to 261,725 tonnes, the highest since April 19.
The red metal is benefiting from signs of stronger demand in China. Chinese refined copper production also grew 12 percent year-on-year to a record 531,000 tonnes in November, according to the National Bureau of Statistics.
“The increase in production is likely to have been one of the factors contributing to the rise in inventory levels, and can to some extent also explain the subdued imports,” Commerzbank said.
Aluminium drifted back to $2,134.50, a $3.50 rise from yesterday. Stocks were down 9,525 tonnes at 5,177,300 tonnes, while cancelled warrants at 1,698,350 tonnes were down 12,425 tonnes.
Tin business at $22,975 was down $115 from yesterday, with the market correcting back after hitting an early eight-month high of $23,199. Inventories were up 25 tonnes at 11,405 tonnes, having hit two-month lows on Monday.
"We would expect tin prices to be fairly choppy over the next few days as long- term, technical funds buy dips and trade/macro players look to sell any rally," broker RBC said.
“Tin has overcome its September high and lead is close to doing so - generally we expect good supply around those highs, which in turn may mean prices do not rise too far above the September highs or at least do not hold above them for too long,” FastMarkets analyst William Adams added.
Lead at $2,311 was up $13 - both stocks and cancelled warrants were down 2,025 tonnes at 352,900 tonnes and 161,775 tonnes respectively.
Zinc gained $12 at $2,097 but was down from its session and October 4 high of $2,100. Stocks were 2,225 tonnes lower at 1,228,900 tonnes, while cancelled warrants at 635,650 tones fell 2,325 tonnes.
Nickel was last at $17,780, a rise of just $5, although inventories were down 552 tonnes at 137,472 tonnes and cancelled warrants at 15,366 tonnes fell 450 tonnes.
Steel business was last at $330/355, with stocks and cancelled warrants both 2,015 tonnes lower at 59,800 tonnes and 11,440 tonnes respectively. Cobalt was indicated at $23,500/27,450 tonnes and molybdenum at $24,750/26,000.
(Additional reporting by Martin Hayes, editing by Mark Shaw)