Metals largely easier

Base metals ended Wednesday's London Metal Exchange (LME) session largely easier, with the market still pondering the longer-term implications of Hurricane Katrina in the United States, traders said.
End-month booksquaring, profit-taking and liquidation was evident, which reined in the copper market, although prices remained fairly close to the record high objective of $3,670 a tonne.
"Prices do not really want to come back too much at the moment, and it is hard to make a case for aggressively shorting all the metals, but all of the action is in energy," a fund source said.
Traders said supportive factors for metals were high oil prices, which had resulted in speculative interest filtering through into other commodities.
Oil prices moved back towards fresh highs above $70 as dealers feared a sharp squeeze on fuel supplies after the hurricane shut down US Gulf Coast refineries and offshore production platforms.
Higher oil prices slow industrial production, so reducing metals demand, but fund buying in oil has spilled over into other commodities as managers buy a basket of assets.
Economic activity might also be dulled by widespread hurricane devastation.
"We need to see how this pans out - it is simply too early to tell," the fund source added.
New Orleans holds nearly half the LME's total stock of zinc, plus smaller tonnages of other metals, and the exchange said it could take several days to get word from warehousing companies about any damage.
However, the exchange said warranted material in warehouses in the city remained good for delivery against LME contracts.
"Any disruption to shipments could have a temporary supportive impact on zinc prices and physical spot premiums," broker Barclays Capital said in a report.
Last three months business was at $1,369 a tonne, up $10 from Tuesday's close.
Copper fell away sharply during late trading when sell-stops were triggered, closing at $3,602, down $43, having failed again to test the highs.
Despite the late downturn and a 1,425-tonne inventory rise, which lifted stocks to a nine-month high of 65,675 tonnes, the market was cushioned by extreme tightness.
The cash-to-threes spread was around $250 backwardation from a little over $200 last week, with tightness centred around early-September dates. Cash/September 6 was at $16/18 backwardation, while the September 6/7 rate stood at $19 premium.
Aluminium fell $18 to $1,855, lead was down $3 at $863, tin dropped $10 to $6,970, but nickel was up $75 at $14,850.