Copper, zinc and aluminium prices closed firm in London on Wednesday, while tin, lead and nickel slid after their early-week rally. "The markets are still looking very good, but it was too much too quickly, so we have seen some fund liquidation," a London Metal Exchange (LME) trader said.
Mining and resource companies helped lead the FTSE 100 index higher. Rio Tinto, BHP Billiton and Anglo American all rose between 1.0 percent and 3.2 percent on expectations of a strong outlook for metal prices. Zinc closed at $3,881 per tonne versus $3,865 on Tuesday, when the metal hit an all-time high of $4,020.
Zinc stocks in LME-registered warehouses fell by 1,725 tonnes to 125,675, their lowest since 1991. "Underlying supply and demand conditions remain firm and developing tightness...is a clear indicator in our view that current market conditions for LME metals are exceptionally tight," a Barclays Capital report said.
Copper for delivery in three months was untraded in the last open outcry trading session, quoted at $7,645/7,650 versus $7,605 on Tuesday. "Copper could easily fall back to $7,500 or $7,250, but still be intact...there is little material around and no extra production," the first trader said.
World number two miner Rio Tinto posted an expected 15 percent fall in third-quarter refined copper production on Wednesday after a smelter was shut down at the giant Kennecott mine in Utah.
Mined copper also was down in the quarter owing to a month-long strike at Rio Tinto's 30 percent-owned Escondida lode in Chile, it said. World refined copper production exceeded consumption by 10,000 tonnes between January and July this year, against a deficit of 296,000 tonnes in the same year-ago period, the International Copper Study Group (ICSG) said in its latest monthly bulletin.
Aluminium closed up $42 or 1.6 percent, at $2,715. Tin, which surged 12 percent on Monday to a contract high of $11,000, ended at $9,700, down 3.0 percent from the previous close of $10,000. Lead fell to $1,493, versus $1,500, after touching a contract high of $1,550 on October 16.
On the same day, nickel hit an all-time high of $31,950. Nickel closed at $30,950, down 1.4 percent or $450 from Tuesday's close. Base metal demand was seen to remain strong, traders said. "In China and India, the real power houses, I don't see any slowdown of demand," the first trader said. But analyst David Thurtell at BNP Paribas said there were some indications of a slowdown in the US economy that could dent future growth in the emerging markets.