Base metals retreat; Nickel down

London Metal Exchange nickel led the way lower for the entire base metals complex Monday as investors took profits but the fundamentals should reassert themselves in the near future, said analysts.

The U.S. stock market see-sawed following sell-offs in Asian and European stocks. And global risk aversion kept investors locking in profits as future metal price direction remained murky.

There has been no major turnaround in the fundamentals for base metals but profit-taking cannot be ruled out at such historically high prices, says Neil Buxton of GFMS Analytics in London.

Three-month nickel posted the largest percentage loss, falling more than 4% to a PM kerb of $39,300/ton from Friday due to another increase in nickel stocks, said Michael Widmer of Calyon in London. LME nickel inventories posted an increase of 204 metric tons to 3,690 tons Monday, with inventories rising roughly 14% from levels one month ago.

But with canceled warrants – material accounted for and to be drawn down at a later date – at 40% of global LME inventories Monday, available nickel stocks comprise less than a day of global consumption.

Meanwhile, commodity trade advisory players and speculators continued to pressure LME prices, said analysts.

Copper prices fell 2% from Friday to a PM kerb of $5,889/ton, but found some support at the lows.

Kevin Norrish of Barclays Capital said the outlook for copper remains well-supported following recent Chinese metals data showing the strength in China's refined copper imports.

Zinc and lead prices each fell 2% on the day but were modestly boosted late Monday in line with short-covering seen in some of the precious metals markets.

However, zinc market players continued to take stock of Chinese demand. China surprised investors last week with data showing it became a net zinc exporter for a third consecutive month.

Overall, base metals have held up remarkably well considering the sell-off in the equities markets, said one metals analyst in New York. And fundamentals should begin to reassert themselves shortly, giving investors a clearer price direction, said the analyst.

Prices in dollar a metric ton.
3 Months Metal     Bid-Ask        Change from
                                 Friday PM kerb
Copper          5889.0-5890.0       Dn  126
Lead            1810.0-1820.0       Dn   40
Zinc            3240.0-3250.0       Dn   80
Aluminium       2676.0-2678.0       Dn   72
Nickel         39300.0-39305.0      Dn 1700
Tin            13100.0-13125.0      Dn   50