LME Metals In Asia Continue To Consolidate

SINGAPORE--Base metals on the London Metal Exchange traded sideways in thin trade Thursday, recovering from morning lows on buying on dips as the complex continues to consolidate in recent ranges, traders said.

Further consolidation remains likely, as base metals lack fresh supply-side news, but strong sentiment and solid technicals should support them on the downside, they said.

Three-month copper was trading at $8,055 a metric ton at 0600 GMT, up from the day's low of $8,025 and $5 higher from the London Wednesday afternoon kerb. Aluminum had fallen by $8 to $2,878/ton, while zinc had recouped most of its losses and was down $5 from the kerb at $4,080/ton.

Profit-taking pressured copper lower at the start of the day on the LME and on the Shanghai Futures Exchange, but the fall was overdone and bargain hunting quickly emerged, said a Shanghai-based trader at one of China's largest copper traders.

Traders said physical copper buying in Asia remained soft, with many buying hand to mouth at these prices.

"Copper in Japan was very quiet with just some small buying from consumers," said a Tokyo-based trader at a large Japanese commodity brokerage.

While LME stocks had declined overnight, canceled warrants also fell, annulling any impact, he added.

Traders tipped copper to continue ranging between $8,000-$8,300/ton.

The market will likely closely watch the weekly stock levels at the Shanghai Futures Exchange, as the exchange was closed last week for the Labor Day holidays. As well, traders said China's physical market remains weak, with metal traders having to sell scrap copper at a discount.

Zinc's move Thursday was mostly in tandem with copper, easing in the morning before paring losses. Its fate largely remains in the hands of copper, although its low stocks should provide underlying support, Standard Bank said in a daily report.

The base metal complex as a whole should continue to consolidate in the immediate term with a bias to the upside, the bank added. "The complex currently remains well-supported by a degree of bargain hunting, and a number of significant players seemingly keen to minimize the downside."

LME aluminum softened slightly in Asia, although the Shanghai Futures Exchange aluminum market was higher, which was unexpected to some, given China's massive increase in domestic production in the first quarter.

"It's surprised me on the upside the strength of the market," said the Shanghai-based trader. "Consumption is quite good."

As of 0600 GMT, nickel had eased in thin trade by $150 to $49,750/ton, tin was untraded and unchanged from the kerb at $14,200/ton and lead was also untraded and last quoted at $2,065/ton, up $5 from the kerb.