London Metal Exchange zinc and copper dropped following the release of weaker-than-expected U.S. economic data Thursday, while traders expect nickel prices to remain buoyant as market supplies remain tight.
Three-month copper and zinc both slumped after the release of U.S. economic data showed a contraction in the U.S. manufacturing sector, according to Michael Widmer of Calyon.
The January ISM manufacturing index fell to 49.3 from 51.4 in December.
Adding to price pressure, copper stocks rose 4,275 tons to reach 216,100 tons Thursday, a net increase of 8,400 tons this week so far, while zinc stocks rose 850 tons to 98,525 tons Thursday.
Lurking in the background, however, is news that a strike at Cerro Colorado's copper mine in Chile remains a possibility now unions have voted in favor of action. If mediation is sought and talks fall through, a strike would start Feb. 7.
Meanwhile, three-month nickel prices fell in part due to news that a strike at Xstrata's Sudbury mine has been averted, but tight supplies keep prices from falling sharply.
Nickel stocks fell 606 metric tons to 3,366 tons Thursday, according to LME data. Canceled warrants – or product accounted for and to be drawn down at a later date – was 27.27% Thursday after Wednesday's 38.82%.
"We still have a relatively tight market in nickel and that's supportive to prices," said Widmer.
In aluminium, talk that Guinea could face another national strike next week is spooking the market, and could create some short-covering interest, given the market's tightness. Guinea is a key bauxite producer, a key ingredient in the production of alumina which in turns makes aluminium.
Prices in dollar a metric ton.
3 Months Metal Bid-Ask Change from
Wednesday PM kerb
Copper 5600.0-5605.0 Dn 135
Lead 1665.0-1670.0 Dn 13.5
Zinc 3389.0-3390.0 Dn 90
Aluminium 2750.0-2753.0 Up 21
Nickel 36825.0-36850.0 Dn 125
Tin 11895.0-11900.0 Dn 105
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