LME base metals end lower

London Metal Exchange base metals declined as nervousness across a number of asset classes continued Wednesday, but market participants will refocus on supply and demand fundamentals for future price direction, said analysts.

Equity markets are not dictating the direction of the LME markets but they are leading to lighter trading volumes as market participants are sidelined waiting for the calm, one LME trader said.

Copper prices drifted lower, but more on a lack of buying than on major selling, the trader said, adding that other metals fell in line with the general downward momentum caused by nervousness.

European shares fell for a second consecutive day Wednesday while crude oil declined. Chinese equity markets rebounded after posting a major decline – the largest in a decade – on Tuesday.

Nevertheless, the sharp sell-off in China on Tuesday triggered fears that attempts to cool the economy of the world's largest consumer of base metals will lead to less consumption of raw materials.

However, the current correction for various asset classes is a short-term phenomenon and metals prices should revert to trading fundamentals, said Michael Widmer of Calyon.

Three-month copper declined roughly 3% from Tuesday to a PM kerb close of $6,015 a metric ton.

Lead and zinc also fell in line with the general base metals markets. Three-month lead fell to a PM kerb of $1,820/ton, down 4% from Tuesday, while zinc fell to a PM kerb of $3,479/ton, down 2.7% from Tuesday.

In addition, prospects that China is likely to remain a net zinc exporter in the medium term weighed on zinc prices.

According to Chinese customs data Wednesday, China imported 27,631 tons of unwrought zinc and alloy in January and exported 71,377 tons. Zinc ore and concentrate imports almost doubled on year to 106,508 tons, the data said.

In other metals, nickel posted a modest decline as critically low stocks provide underlying price support. Available LME nickel stocks comprise less than one day's worth of global nickel consumption.

Prices in dollar a metric ton.
3-Months Metal     Bid-Ask        Change from
                                 Tuesday PM kerb
Copper           6015.0-6018.0      Dn  205
Lead             1820.0-1825.0      Dn   85
Zinc             3479.0-3480.0      Dn  101
Aluminium        2810.0-2815.0      Dn   71
Nickel          41390.0-41395.0     Dn  260
Tin             13125.0-13150.0     Dn  425