Metals prices fall to multi-week lows as correction continues

Base metals prices declined across the board during London Metal Exchange premarket trading on Monday December 19, extending the trend that emerged last week, ahead of the year-end holidays, traders said.

The three-month copper price led the way, easing to a one-month low, amid another big increase in warehouse stocks. Zinc and lead also declined to their lowest for a month, nickel to a three-week low and aluminium its softest for around a week.  

“It has carried on from where we left off last week – the market is looking a bit tired now and there is some profit-taking around,” a trader said.

After today’s cash pricing against the December ‘third Wednesday’ in the open-outcry sessions, activity is expected to slow ahead of the holiday-truncated weeks. But this reduced liquidity will leave the market prone to bouts of fund-induced volatile movements 

“Prices were looking a bit toppy and that seems to have been the case. We would not be surprised to see prices pull back as profit-taking sets in ahead of the end of the year,” Metal Bulletin William Adams analyst said.

In wider markets, there was little to generate excitement, with equities slightly lower in Europe, while the dollar index was little changed around 102.78. Against the euro, the dollar it was around 1.0450, having hit 1.0366 last week, its strongest since January 2003.

On the data side, there are few inputs today – the German Ifo business climate index for December was 111.0 against a forecast 110.7. This afternoon the US flash services PMI will be issued.

In the metals, the three-month copper price, which has fallen steadily in recent sessions, declined further to trade at $5,585 per tonne, an $80 loss from Friday, having touched a low of $5,578.

Inventories rose a net 38,400 tonnes to 345,475 tonnes, their highest for three months, due to warrantings of 17,300 tonnes in Busan, 14,050 tonnes in Rotterdam and 7,350 tonnes in Singapore. 

Since last Monday, copper stocks have risen 132,150 tonnes, with on-warrant availability up 83% during that period. Further inventory increases are anticipated towards the end of the year.

The three-month aluminium price fell $1 to $1,716 per tonne, while inventories dropped 5,225 tonnes to 2,112,275 tonnes. The three-month nickel price eased $135 to $11,035 per tonne, with stocks climbing 114 tonnes to 371,400 tonnes.

The three-month zinc price slipped $79 to $2,651 per tonne – stocks were down 1,300 tonnes at 429,650 tonnes. The three-month lead price was $39 lower at $2,206 per tonne, with a 550-tonne fall in inventories to 186,525 tonnes.

The three-month tin price slipped $65 to $21,075 per tonne, while inventories declined 85 tonnes to 3,330 tonnes.

Steel billet, cobalt and molybdenum were neglected, with no inventory movements seen.

 (Additional reporting by Vivian Teo in Singapore, editing by Mark Shaw)