LIVE FUTURES REPORT 12/09: LME prices fall as correction continues; big stock rises dent copper, zinc

Base metals prices were looking to be base-building and consolidating during London Metal Exchange pre-market trading on Tuesday September 12, although further downside pressure was evident as corrective sales were sustained, traders said.

Losses were largely modest and turnovers routine, although copper and zinc were pressured by large warehouse inventory increases, with some sub-$6,700 per tonne sell-stops seen in the red metal.

“Before the weekend a lot of people decided to take some money off the table…the market is now looking to see what happens next. We will probably need some good news to sustain the rallies,” a trader said.

Analysts said the waves of profit-taking seen in response to recent impressive upswings is now ushering in some consolidation.

“We remain overall bullish for the metals, but question whether enough potential buyers will be willing to chase prices higher from these already rich price levels,” Metal Bulletin senior analyst William Adams said.

Copper, zinc sag as inventories rise

  • The three-month copper price fell under $6,700 per tonne after a net 10,300-tonne increase in warehouse inventories to 218,725 tonnes. This was due to warrantings of 7,225 tonnes in Rotterdam and 5,200 tonnes in Singapore.
  • Business was seen down to $6,686 per tonne before the market settled at $6,690, a $58 loss from the previous close.
  • “Copper prices have risen by over 25% year-to-date, and we expect some profit-taking in the very near term. The outlook for copper remains very positive nevertheless, given continuing market deficits. Miners are anticipating further tightness in supply as a consequence of lost production this year, notably from the Escondida, Cerro Verde [Chile] and Grasberg [Indonesia] mines,” SG Market Research noted.
  • The three-month zinc price retreated to $3,063 per tonne, down $20 from Monday. Stocks climbed 13,550 tonnes to 253,975 tonnes, due entirely to 13,700 tonnes warranted in Antwerp.

Others lose ground

  • The three-month aluminium price settled just $2 lower at $2,120 per tonne, while stocks were 1,100 tonnes lower at 1,318,950 tonnes. Prices remain not far off the recent $2,145 peak, which was the highest since February 2013.
  • The three-month lead market was $10 lower at $2,267 per tonne – inventories declined 250 tonnes to 163,775 tonnes.
  • The three-month nickel price dropped to $11,635, a $115 loss. Stocks rose a modest 12 tonnes to 382,890 tonnes.
  • The three-month tin price eased $45 to $20,705, with stocks climbing 50 tonnes to 163,775 tonnes.

Currency moves and data releases

  • The dollar index was 0.01 lower at 91.98.
  • In other commodities, the Brent crude oil spot price was down 41 cents to $53.49 per barrel.
  • In equities, the UK FTSE 100 index was just some nine points lower around 7,404.
  • The data side is low-key, with the series of UK releases this morning so far not seen as metals-sensitive. Later today, the US JOLTS job openings figures will be issued.

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