Copper, Zinc Climb On Short-Covering

LME zinc and copper advanced on short-covering yesterday morning but most metals hugged recent ranges as Russian metals major Norilsk said its biggest plant was operating normally. Three-month copper finished the morning kerb at $2,105 per tonne, up $22 from Mondays afternoon kerb.

The buying was deemed to be short-covering after prices held the downside during the rings and made further gains when Comex opened just before kerb trading started. Prices earlier had touched $2,080, which has provided a floor for the past several days.

The market made further progress in later inter-office activity, indicated at $2,112/15, but it next needed to threaten resistance at $2,120/25, which has capped prices for most of October.

Everything seems to be stuck in ranges. We need a break-out or some fresh news to get things going again, one floor trader said. Zinc prices also got a boost from short-covering after prices refused to go lower, bottoming at $1,306. They ended the morning $12 firmer at $1,324 per tonne. It was probing the 10-day moving average at $1,322, with next resistance pegged around $1,330/35.

The market had looked vulnerable as the cash/threes contango stayed fairly wide, trading at $17 in the rings.

Three-month nickel finished the morning kerb little changed at $6,500 per tonne, down $5 from Monday, when doubts had already surfaced on the reliability of a Prime Tass news agency report.

The agency said copper and nickel output had stopped at Norilsks Nadezhdinsky plant, its largest. Yesterday just ahead of ring trading, the director of the plant said the facility was working normally.

Technical indictors are still pointing lower, so a retest of $6,400 is likely, broker Brandeis said in a commentary. Stocks rose 480 tonnes yesterday to 62,712 tonnes. Aluminium edged lower during the rings to $1,631, but found some trade buying and ended the morning little changed at $1,640, down $1. Spreads remained tight, with the focus on November. The cash/threes were a touch narrower around a $4 contango while November/threes was at a $10/$11 backwardation. I think it might be some of the shorts from August who rolled over their positions into November, one floor trader said.

Tightness flared in August when the cash/threes widened to $119 backwardation. Tin barely moved, adding $10 to $5,650 and lead ended the kerb unchanged at $611. Alloy also saw little movement, ending at $1,465/75, compared to $1,470.