Base metals remained mixed during Wednesday London Metal Exchange (LME) open-outcry trading, with the market seeking clear direction after this week's sharp fluctuations, traders said.
Short-term movements have become erratic, due to conflicting chart patterns, dollar fluctuations and fundamental developments. Ring trading saw divergent patterns, with copper looking to stabilise, tin decline, and aluminium advance.
"At the moment, there is a lot of option-related buying and selling which is causing the fluctuations, which are wilder because of thin volumes, " a trader said.
Robin Bhar of Standard Bank London said in a report that volatility was likely to continue amid the thin trading conditions of the northern hemisphere summer holiday period.
However, further strong economic data should support prices, as should stock withdrawals, Martin Fewings, analyst at Mitsui Bussan Commodities said.
Copper, which ranged from just under $2,500 to above $2,600 on Tuesday, spent most of the session ranging between $2,575 and $2,600. The market ended at $2,580, down $22 a tonne from Tuesday's kerb close.
"Copper could go higher, but it's stuck in a wide range between $2,500 and $2,750 and we've already touched those lows three times in recent days," the trader said.
Tin was untraded in the kerb, easing $55 to $8,575/600, amid a softening backwardation and further stock increases.
The cash/threes backwardation narrowed in to trade at $250 by the close against $400/500 on Tuesday, amid freer lending after a 1,050-tonne inventory increase.
Aluminium climbed to $1,678, up $29, lifted by a 5,375-tonne stock decline to 994,075 tonnes. Borrowing in August has seen the overall cash/threes contango eroded, with the spread trading at $3.00 backwardation. Last week there was a $6.0 contango.
"As well as option-related buying, the market has also benefited from chart-related gains on fund buying, although we expect to see producer selling at $1,700," the trader said.
"Zinc has seen some technical-related selling from the funds, while lead has firmer fundamentals."
Lead closed at $808, up $3, but zinc ended at $1,013 from $1,026, while nickel rose $55 to $12,905.