London 25/07/2011 - Base metals were mostly lower on the LME on Monday morning when investors took risk off the table. Market focus switched to the lack of consensus among US policymakers, who are racing against the clock to raise the country’s debt ceiling and avert a technical default. Copper was last down $15 at $9,660 per tonne. Stocks fell a net 1,125 tonnes to 471,200 tonnes and cancelled warrants fell 2,150 tonnes to 20,100 tonnes. “The market in the metals is telling us that the future is a bit less lovely regarding economic growth than it was only mid-week last week while it is telling us that confusion reigns almost everywhere else and thus the ‘precious’ metals lead the way to the upside and the “base” metals signal something economically disconcerting lies ahead,” Dennis Gartman, author of the Gartman Letter, said. But aluminium rose to its highest since April 15 above $2,611.75, up from an earlier low of $2,568, on technical buying. Inventories fell 10,325 tonnes to 4,382,225 tonnes due to movements across several locations and cancelled warrants rose 29,075 tonnes to 405,850 tonnes. Aluminium had “good breakout numbers to reach a higher trading range”, one trader said. “Gold is helping this morning too.” The yellow metal hit a fresh all-time high $1,622.20 per ounce overnight. But risk aversion kept the rest of the complex muted on worries that a failure to raise the country’s debt ceiling could trigger global economic calamity and damage its coveted Triple-A credit rating. A deficit deal is needed to permit a vote to increase the $14.3 trillion debt ceiling by August 2. “If the markets become increasing nervous - we think there is a good chance they will - we would not be surprised if base metals pull back further,” FastMarkets analyst William Adams said. “We doubt the US will default but the political impasse may well prompt some negative comments from the rating agencies.” On Thursday, Standard & Poor’s repeated its concerns over the country’s plans to tackle rising deficits, warning of a one-in-two chance that it will downgrade the country’s prized AAA rating within three months. Meanwhile, in Europe, the sovereign debt situation is similarly pessimistic. Ratings agency Moody's has cut Greece's debt ratings by three notches to Ca on Monday, leaving it just one notch above what is considered default, and said the chance of a default is now "virtually 100 percent", Reuters reported. The dollar was stable against the euro at 1.4370. COPPER IMPORTS ON THE RISE Copper traded in a narrow range between $9,608 and $9,675. Stocks fell a net 1,125 tonnes to 471,200 tonnes and cancelled warrants fell 2,150 tonnes to 20,100 tonnes. Chinese copper imports are on the rebound, rising for the first time in three months, up 20 percent on June but still down 30 percent on last year, the latest trade data shows. “This development when viewed with the domestic warehouse inventories suggests the destocking in the world's largest consumer might be nearing an end,” Citigroup said. The latest supply and demand figures by the International Copper Study Group showed a 69,000-tonne deficit for the first four months of the year, which stands in contrast to the inventory build-up in LME warehouses over the same period. In news, a strike at the Escondida copper mine in Chile - the largest in the world - entered its third day on Sunday, as workers demanded higher wages from operator BHP Billiton. The company called the strike “illegal” and said it was working on a plan to secure its operations. Nickel fell to $23,874 from $23,950-24,000 on Friday and zinc was down $26 at $2,472. It had risen to its most expensive since April 12 at $2,492 last week. Lead was flat from Friday’s close at $2,690. Stocks rose 525 tonnes to 310,800 tonnes, while cancelled warrants rose 650 tonnes to 17,750 tonnes. Tin fell $450 to $27,800 - the latter hit a two-month high at $28,500 on Friday. Steel billet was indicated at $585/590, cobalt at $34,000/35,250 and molybdenum at $32,400/36,500.

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