London Metal Exchange copper, tin and zinc succumbed to further profit taking Thursday as U.S.-based funds liquidated positions, although analysts said trade buying should support prices close to current levels.
At 1653 GMT, LME copper was down 2.5% from Wednesday at $7,840/ton, while tin was down roughly 3% at $13,800/ton and zinc and aluminium were around 2% lower, at $4,020/ton and $2,825/ton, respectively.
A lack of follow-through buying added to the downward price pressure across the complex, said UBS analyst Robin Bhar.
"Specs don't want to buy at these kind of levels, they'd rather wait and see, and consumers won't take the market higher," he said, referring to historical strength across the complex.
"Consumer and investor buying should come in around these levels, so downside is limited," he added.
In the afternoon session, U.S.-based funds accelerated selling pressure on LME copper and zinc, a broker said.
Selling in copper was primarily chart-based, analysts said, citing solid fundamentals with declining inventories amid the peak demand season, fueled by China.
Traders will watch carefully whether copper holds near the 20-day moving average of $7,916.20 a metric ton, the broker added.
Meanwhile, tin scored the largest percentage fall of the day as long liquidation compounded a technically driven slide, triggered by a break below the 20-day moving average of $13,967.30/ton, another broker said.
However, speculators don't want to go too short, UBS's Bhar noted, because even through 12 or so Indonesian smelters now have export licenses, stocks are close to the lowest levels of the year, at 8,045 tons according to Thursday's LME data.
In October, Indonesia closed dozens of small smelters on environmental and taxation concerns, but has since reissued export licenses, somewhat easing price pressure.
In other metals, LME nickel bucked the trend, boosted by supply-side concerns in Turkey and Australia.
On Wednesday, European Nickel PLC said it continued to encounter delays in obtaining the necessary forestry permit at its Caldag nickel project in Turkey.
Meanwhile, Australian nickel miner Jubilee Mines NL temporarily suspended development work at its Cosmos nickel mine following the death of a worker, apparently of natural causes, the company said in a statement Wednesday. Mining operations have been suspended temporarily in a small part of the development area, said a company spokesman.
"One event is bad, but two is even worse," said Calyon analyst Michael Widmer.
In addition, the Western Australia Port of Esperance said Tuesday it would complete required upgrading work at its nickel-loading facilities before the next shipment is due in June.
In looking into Friday and next week, "There's scope for a bit of a push higher but the window is rapidly closing," said UBS's Bhar, noting the impending "summer slowdown" season.
Prices in dollars a metric ton.
3 Months Metal Bid-Ask Change from
Wednesday PM kerb
Copper 7880.0-7890.0 Dn 170
Lead 2040.0-2045.0 Dn 20
Zinc 4000.0-4010. Dn 85
Aluminium 2837.5-2838.0 Dn 49
Nickel 49900.0-50000.0
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