Zinc futures hit a record high for the fourth straight session on Wednesday before retreating, but losses in other metals accumulated as fund investors eyed other assets. "Overall sentiment is still strong, but the interest in metals is shifting to other assets," an LME floor trader said.
Copper took a knock after exchange warehouse stocks resumed their rise. Aluminium continued to attract trade selling for nearby delivery, but analysts noted a pick-up in prices for long-dated contracts. Selling intensified later in the session with more business going through, with three months zinc closing down $80 at $4,420 a tonne, off its earlier new record high of $4,535.
Analysts and traders remained positive about the market in the near term though, with many looking for the metal, used to protect steel from rusting, to target $5,000. "It is difficult to argue why it shouldn't keep going higher as stocks keep falling," UBS metals analyst Robin Bhar said. LME warehouse stocks fell to 97,725 tonnes on Tuesday - their lowest since March 1991 when they reached 86,000 tonnes.
Prices have soared by more than 130 percent since the start of the year as consumption has outpaced production, taking stocks to critically low levels.
Dealers said the LME's electronic trading system Select was functioning normally on Wedneys of suspended trade due to technical hitches. Sentiment in copper was largely apathetic, with prices stuck in a rut. Prices fell by $295 at the close to $7,120.
Copper mine capacity from 2005 to 2009 is seen to grow at an average rate of 4.6 percent a year, faster than previously forecast and exceeding the expansion of smelter capacity, the International Copper Study Group said. Stocks in LME warehouses rose by 2,925 tonnes to 144,250.
"Stocks are going up in copper and the metal looks expensive," another LME floor trader said. "It has to go down to $5,500 or $6,500 before buyers come in again but with no doubt, the bull market is far from over."
Zambia's Konkola Copper Mines (KCM) halted copper production at its Tailings Leach Plant on orders from the government after a spill polluted a river, a company official said. Before the production halt, KCM planned to produce 200,000 tonnes of finished copper by December 2006.
Aluminium dropped $75 to end at $2,717 a tonne. Nickel fell to $30,100, just below Tuesday's $31,200. Traders were monitoring New Caledonia, where a general strike has affected shipments of ore to a nickel smelter owned by France's Eramet.
Production of metal has been cut by a third, which translates into about 20,000 tonnes of metal on an annual basis. Nickel prices hit a record high of $32,265 on October 20, way above their level at the end of 2005 of $13,500. LME lead set a new record high in the open outcry trade of $1,755 a tonne. It closed at $1,715, down $20.
"Lead is really a star performer at the moment, it looks very strong fundamentally and together with zinc it can go higher," a third LME floor trader said. Tin ended down $350 at $9,800.
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