Metals ended softer on the London Metal Exchange (LME) on Wednesday, coming under selling pressure in late open-outcry trade, dealers said. "Across the board there has been small-scale speculative liquidation," an LME trader said. Copper ended $13 softer at $3,632 a tonne, towards the lower end of the day's $3,625-$3,677 trading range.
"This is a crucial area. If the market doesn't recover quickly we could see more selling," the trader said. "But as long as the funds have the money and are willing to spend, we are likely to bounce back," he said. Another trader said: "Technically copper is looking very bullish, but from a fundamental perspective it looks overpriced."
He added that prices falls were likely to be supported by consumer buying to replenish very low stocks. The cash/threes backwardation narrowed to $182/185 from above $200 on Tuesday as a short-term squeeze passed. Zinc came under pressure, falling to $1,374, down $17 from Tuesday's kerb close.
TOM/next traded at $2.00 backwardation at midday, comfortably under the $3.50 limit imposed by the LME on Tuesday, while cash/threes was at $8.50/10.50 contango, having moved out from near level in the previous session.
Traders said rates had settled down as there was less concern over New Orleans metal. Zinc jumped three percent to an eight-year high of $1,454 after the LME suspended delivery on warranted zinc from its warehouses in the storm-ravaged city of New Orleans.
Analysts said reconstruction of New Orleans was likely to support metals, but ABN Amro's Nick Moore noted growing concern that the amount of scrap that will emerge from the wrecked city would put downward pressure on prices.
Aluminium fell to $1,852 from the previous $1,859.50. Lead fell $10 to $870, tin gained $25 to $6,950/7,000. Nickel was at $14,500, versus $14,800. "Nickel stocks have more than doubled from the low in May," ABN Amro's Moore said.
He added that Chinese nickel imports have been falling. "Net imports in July were 1,579 tonnes, the lowest in 17 months, versus 6,322 tonnes in June," he said.