London 10/03/2016 - Base metals ended Thursday LME trading in negative territory after the European Central Bank (ECB) delivered a bigger stimulus than expected.
"Although the ECB over-delivered at its March meeting by cutting further rates and extending its monthly asset purchases, risk-off sentiment has prevailed, as evidenced by falling broad equities and the higher level of financial market volatility," Boris Mikanikrezai, FastMarkets analyst, said.
"Against this backdrop, base metals moved lower, with weakening oil prices adding further downward pressure on the complex," he added.
Earlier today, the European Central Bank (ECB) introduced a wide-ranging set of new policies intended to boost growth and return inflation to normal levels.
By lowering deposit rates by 10 basis points to -0.4 percent and expanding its asset purchasing programme to 80 billion euros per month, president Mario Draghi is attempting to avoid another recession.
Draghi said the programme will run until at least March 2017 but also said he does not expect any further measures since he is confident the loosening will achieve the bank's inflation and growth targets.
"An interest rate of zero - that just goes to show how dire the economic picture is in Europe. Fundamentally - negative for metals," a trader said.
Base metals have largely shrugged off frontline data from China today - its CPI was a better-than-expected 2.3 percent while its PPI was as forecast at -4.9 percent.
"It has been pretty slow today, and we are seeing much less in the way of CTA stuff coming through, as if (market) has lost its way somewhat," another trader said.
In US data, weekly unemployment claims between February 27 and March 5 came in at 259,000, under the forecast of 272,000 and the psychological 300,000 mark.
In the metals, copper concluded at $4,890 per tonne, down $45 on Wednesday's close. More than 17,000 lots changed hands on Select so far. Stocks continued to drop, with inventories a net 3,400 tonnes lower at 178,575 tonnes, but cancelled warrants were also lower, down 2,600 tonnes at 45,675 tonnes.
Aluminium at $1,559 was down $23 with the contango in cash/threes hitting $9.25, having been at a $25 backwardation last week. Still, a dominant holder has kept the sensitive 'Tom'/Next spread tight at $0.25.
Meanwhile, rising aluminium prices in China have triggered the restart of seven aluminium domestic companies, AZ China reported - a move that should weigh on global prices.
Nickel at $8,755 was down $135; stocks fell 1,866 tonnes to 426,769 tonnes. A Philippines mine group representing 60 percent of nickel ore production has agreed an output and shipment cut this year of as much as 20 percent due to weak Chinese demand, Triland said.
Lead at $1,818 was down $27. Both cash/threes and 'Tom'/next were backwardated of $5.25 and $9 respectively.
Stocks and cancelled warrants both fell 1,925 tonnes to 169,450 tonnes and 67,700 tonnes respectively. Yesterday, the LME adjusted lead stocks data by 31,700 tonnes after an error in reporting in Vlissingen.
"This is a pretty concerning development and another black mark against the LME's warehousing system just when it was confident it had fixed the previous queue problems which restricted availability of material. Lead prices had been dented by the apparent 'inflow' in February and so it was not too surprising to see upside for lead," Macquarie noted.
Zinc at $1,765 was down $32 after stocks fell 2,100 tonnes. Tin at $16,625 was down $175 - stocks increased 50 tonnes to 3,770 tonnes.
Steel was last indicated at $65/115 and cobalt and molybdenum at $22,700/23,200 and $11,700/12,200 respectively.
(Additional reporting by Kathleen Retourne and Martin Hayes, editing by Tom Jennemann)