London Metal Exchange (LME) copper prices extended gains in thin trade on Wednesday on consumer and technical buying, supported by a two percent fall in exchange stocks, traders said. Three-months copper was at $3,069 a tonne, up $19 from Tuesday's London kerb close. The premium for cash metal above the three-month price widened to $182. "The market sentiment is improving a little but there is very little hard news to support this," an LME trader said.
"I think the market was short at the beginning of this week and then stops were triggered when it moved up, as so often during the last few months."
With mixed signs from economic data - stronger than expected US durable goods orders in April but weak European business sentiment - trade was thin, he added, noting a holiday in parts of Germany on Thursday.
Copper stocks fell 1,000 tonnes overnight to 49,225, not far above the January level of 43,625 and the lowest since May 1988.
Analyst William Adams of BaseMetals.com said in a daily report: "With LME stocks low and still being drawn down the markets are tight and therefore are still vulnerable to upside moves, even if the longer term outlook is less bullish.
"Overall, the metals look set to consolidate further and this may well lead to further strength as short-covering and consumer buying dominates.
"A rush to the upside is unlikely as with limited room expected on the upside, the funds are less likely to get too bullish again. Also if the dollar continues to strengthen then funds that were in for the long term may also be tempted to lighten their holdings."
The euro was slightly up at $1.2605. It hit a seven-month low of $1.2533 on Monday.
Aluminium stocks fell by only 75 tonnes, zinc stocks lost 650 tonnes and lead stocks dropped by 925 tonnes, while nickel rose by 126 tonnes.
Aluminium rose $10 to $1,750 and zinc gained $15 to $1,268, while lead was untraded but indicated at $966/67, up $3.
Barclays Capital analyst Ingrid Sternby said in a note that zinc stocks had fallen to their lowest since the second quarter of 2002 and the cash-threes spread appeared to heading towards backwardation.
Nickel was up $110 at $16,300, while tin gained $5 to $8,020.
The cash/threes backwardation for nickel was holding steady at $720/770.
Prices of LME-spec polypropylene (PP) and linear low-density polyethylene (LLDPE) drifted lower in Europe this week, maintaining the 2004 trend, with official futures trading now just two days away.
September OTC PP was indicated at $965/990 a tonne on the website of London Metal Exchange ring-dealer Sempra Metals, down from $1,070/1,075 a week ago. LLDPE was at $965/980, against $1,030/1,060.
Since late February, when Sempra started publishing OTC prices, PP has eased from $1,225/1,275, while LLDPE is down from $1,275/1,325.
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