London Metal Exchange copper ended down on Tuesday after partially recouping early losses, following a rebound in equities markets, while aluminium was under pressure after two successive days of rising stocks. Copper for delivery in three months ended the day down $75 or 1 percent at $7,310 per tonne, after earlier trading as low as $7,210.
Aluminium closed at $2,453, down $22, after dropping $69 on Monday. "Metals are a bit under pressure, LME stocks are not helpful," analyst Stephen Briggs at Societe Generale Corporate and Investment Banking said. LME stocks of aluminium jumped 12,900 tonnes on Monday and rose another 7,200 to 846,825 on Tuesday, their highest level since August 2004.
"However, restrictions of China on aluminium exports and a pick up of demand after the summer season might limit the downside for aluminium prices," a Dresdner Kleinwort report said.
Metal prices were seen remaining hostage to movements in other markets as long as credit squeeze worries persisted. However, any dips were likely to be well supported ahead of fourth quarter seasonal strength in demand, analysts said. Copper miner Kazakhmys posted a 22 percent rise in half-year core profit on Tuesday.
"The outlook for pricing and demand remains firm," chairman Vladimir Kim said in a statement. Shares in Kazakhmys were up 2.62 percent, while the FTSE index of 100 leading shares rose 0.98 percent.
Traders would monitor his week's flow of United States economic data for information about the prospects for demand in light of the recent turmoil in financial markets.
Data released by the Institute for Supply Management on Tuesday showed US manufacturing activity was broadly in line with expectations last month. Still to come this week are the Federal Reserve's beige book summary of the economy's performance on Wednesday, the European Central Bank's interest rate decision on Thursday and the monthly non-farm payrolls report on Friday. Most important, however, would be a meeting of the US Federal Reserve later in the month.
"At this stage, we don't see much direction in practically any of the markets until the Fed's September 18th meeting," MF Global analyst Edward Meir said in a market report. Zinc for delivery in three months fell to $2,950 from $3,035/3,040 and lead was at $3,000, down $20.
"There is some nervousness in the market that the trend of falling lead stocks is coming to an end," Briggs said. In early trade prices dropped 3 percent to an intraday low of $2,920 as traders expected a big inflow of LME stocks. Prices of lead, a metal mainly used in batteries, have gained over 75 percent this year on strong demand and tight stocks.
LME inventories came in 100 tonnes higher totalling 25,300, down by over 360 percent, from its recent peak in mid-2006 at around 120,000. Stocks are at the lowest level since March 1990. Nickel fell 4.2 percent to $28,500 from $29,750/29,850 and tin shed $600 to $14,700.
Exports of tin from the Bangka-Belitung islands in Indonesia jumped nearly eight-fold in August to 17,810.94 tonnes from July, trade ministry data showed on Tuesday. The increase of exports from the independent smelters comes after the world's largest integrated tin miner PT Timah Tbk said at the end of August it would limit tin exports to boost prices.
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