Prices checked overhead, zinc slides from 11-mth high above $2,100

Base metals prices, earlier around multi-week and int he case of zinc multi-month highs, pared gains to settle around mixed levels during Thursday’s LME premarket – profit-taking in relatively thin conditions put a brake on some over-extended markets.

Zinc, which briefly hit $2,105.50 to notch up a fresh 11-month high, backtracked to little-changed levels, while aluminium, nickel, lead and tin were all pulled back from one-month highs. After the initial downswing, fund buying emerged around the lows.

Traders said there were few fundamental factors to justify sustained strength so the mid-week moves could well just be shallow bounces, with consolidation more likely now.

“The Chinese absence today and tomorrow on Dragon Boat Festival has trimmed liquidity, in turn raising volatility, as selling hit the LME complex on the London open, damaging prices in relatively low volumes,” one said.

This morning did see some data issued by China, with the CPI running at a two-percent increase in May – it was expected to be 2.3 percent. But its PPI fell 2.8 percent, an improvement on the 3.4-percent decline in April.

In other markets, the dollar continues to hover around five-week lows – the possibility of the US Federal Reserve raising interest rates in the near term has receded following the disappointing jobs report released last week. The dollar index was last at 93.80.

Today’s US data includes initial jobless claims and wholesale inventories.

In the metals, zinc recently traded at $2,060, near the day’s lows and a $2 loss now from Wednesday when technical buying underpinned the price surge. Warehouse stocks were down a net 1,250 tonnes to 380,900 tonnes while cancelled warrants fell by the same tonnage to 28,925 tonnes.

Copper continued to struggle, undermined by continual warehouse stock falls and the reversion to a contango. Business at $4,570 was down $8. Inventories rose 5,925 tonnes to 213,225 tonnes, the highest since February 16, while cancelled warrants fell 3,100 tonnes to 45,000 tonnes.

Aluminium, which was boosted by consumer buying in the previous session, was $3 lower at $1,601. Stocks dropped 6,700 tonnes to 2,481,625 tonnes and cancelled warrants fell 3,700 tonnes to 1,097,475 tonnes.

Nickel rose as high as $9,145 before hitting overhead sales and traded recently at $8,950, down $10. But stocks were down 768 tonnes to 394,746 tonnes and cancelled warrants fell 1,146 tonnes to 121,170 tonnes.

Lead remained $7 higher at $1,742 although stocks were up 550 tonnes at 185,950 tonnes and cancelled warrants climbed 100 tonnes to 73,650 tonnes. Tin was $15 lower at $17,075, with stocks and cancelled warrants both falling 65 tonnes to 6,665 tonnes and 1,625 tonnes respectively.

Steel, cobalt and molybdenum were neglected.

(Editing by Mark Shaw)