Metals struggle as copper trims gains, prices mixed

Base metals prices settled at mixed levels during Monday LME pre-market trading, with the overall trend a reflection of wider global market uncertainties and current sluggish sentiment, traders said.

Copper prices initially corrected higher from last week’s four-month lows, matching Chinese markets following a short two-day holiday at the end of the previous week. But once those gains petered out, the complex drifted in generally low-key volumes and interest.

“There has been some reasonable volume going through on copper, which looks to be the Chinese catching up from before the [Dragon Boat] holiday,” a trader said. “But the market looks as if the risk is to the downside. The economic and political picture is the driver, and that is very muddy right now.”

In other markets, equities were easier in Europe while the dollar was losing some ground against the euro at around 1.1270.

Business flows and market direction will partly be influenced by the start of LME Week Asia, traders said – many industry participants will be in Hong Kong.

Data released earlier from China was uninspiring, with May industrial production rising 6.0 percent against a forecast 6.1 percent and fixed asset investment increased at a mediocre 9.5 percent, missing the predicted 10.5 percent.

The economic calendar is light elsewhere but there are key macro-economic releases, monetary policy meetings and political activity later this week.

“Global growth worries persist and its ‘risk off’ ahead of the FOMC meeting this week and the UK EU referendum the following week,” LME RDM Sucden said in a report.

The FOMC meeting is expected to provide further signals on when the US might raise interest rates. As well, the impending Brexit vote could add to wider market market volatility – both in the run-up to the UK vote and in the immediate aftermath.

In the metals, copper, which hit a low of $4,487 on Friday, was holding above $4,500 – it traded recently at $4,523 per tonne, up $13 from the Friday close but well below early highs near $4,590.

he nearby spreads, which rapidly switched from long-running backwardations to contango structures, last week, continued to relax – the cash/trees rate traded out at $15.00 contango.

In warehouse stock data, the recent pattern of warranting abated today – inventories declined a net 3,050 tonnes to 207,625 tonnes.

Aluminium continued to range under the $1,600 level, trading at $1,578, a $5 advance from Friday. Stocks fell 5,375 tonnes to 2,468,850 tonnes.

Zinc was ranging back below $2,100, where technical drivers and a more-solid fundamental backdrop lifted the market to a one-year high last week. It traded at $2,063, down $22. Inventories fell 325 tonnes to 380,075 tonnes.

In others, lead traded at $1,697, up $2, while stocks were unchanged at 185,925 tonnes. Nickel was $50 lower at $8,870 – inventories fell 930 tonnes to 393,732 tonnes.

Tin fell $50 to $17,050, with stocks down 20 tonnes at 6,555 tonnes. Steel billet, cobalt and molybdenum were all neglected.

(Editing by Mark Shaw)