Copper and aluminium prices held steady in quiet trade on Thursday, with investors waiting for direction, while red-hot zinc prices hovered just below the previous day's all-time high.
Copper for delivery in three months on the London Metal Exchange was trading at $5,108/$5,113 a tonne by 0409 GMT, against Wednesday's London close of $5,109.
Copper, which is used in construction and electronics, hit a record high of $5,186 on Tuesday. "The market is looking to hold above $5,060 before challenging further highs, with fund money returning to the market for the new quarter and a good proportion coming into commodities," said an LME trader in Hong Kong.
Traders said major market players were reluctant to take new positions before the end of the first quarter or until they see clear signs of direction set by investment funds.
"We saw some light selling from China for LME copper, but most players are staying on the sidelines to wait for direction," a metals trader in Tokyo said.
He said Japanese players were also expected to take a low profile in the market ahead of the new fiscal year starting from April 1.
On the supply side, LME copper warehouse inventories fell 1,300 tonnes to 129,000 tonnes on Wednesday. In mid-March, stocks peaked at 134,700 tonnes, the highest level since mid-2004.
The most active Shanghai copper contract, June, closed the morning session at 48,000 yuan ($5,977), up 100 yuan from Wednesday's close.
"We still have a lot of aluminium stocks in Shanghai and not huge but it seems to be enough presently for copper stocks," a Shanghai-based metals trader said. "That's why the market softened in early trade."
But a firmer tone in spot copper prices in late morning trade stoked light buying interest in Shanghai copper futures, he said.
There was also some arbitrage trade - selling LME copper and at the same time buying Shanghai copper, he said.
The most active Shanghai aluminium contract, June, was down 20 yuan at 20,010 yuan a tonne. LME aluminium futures were at $2,473/$2,478 a tonne, up from Wednesday's close at $2,470.
In other metals, zinc futures slipped to $2,515/$2,525 a tonne from London's close at $2,520. On Wednesday, it hit a new record of $2,525. Given tight global supply of zinc concentrate and strong demand for zinc-coated steel for construction, vehicles and other uses, zinc prices have risen more than 30 percent since the end of last year. LME zinc stocks fell another 2,700 tonnes on Wednesday to exactly 300,000 tonnes, the lowest since July 2001. At the end of last year, stocks stood at 393,600 tonnes.
Zinc's strong run has lifted it to a premium over aluminium for the first time in about 13 years.
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