Aluminium Tests Two-Year Low On Lme

Traders were forecasting further losses near term, especially in aluminium and copper. Aluminium ended just above a two-year low of $1,437 a tonne, while copper probed towards key support at $1,900.

Despite robust background fundamentals nickel dived from a 2-1/2 month high of $7,820 as copper and aluminium eased.

Traders said aluminium moved lower on the back of slow physical demand and concern at recent rises in LME stocks.

This week's major aluminium industry conference in Germany also dogged the market, because it failed to generate obvious bullish factors. Most attending the meeting were bearish for aluminium...I would say only 20 per cent were on the bullish side of the market, one LME floor trader who attended the conference said.

 

He said aluminium was seen falling further as new capacity came on stream. No one is sure where the consumption will come from to absorb the rising capacity, the trader said. However, consumer buying did help give the market a short term reprieve.

By the morning close three months aluminium was at $1,445, still down on Tuesday's LME close of $1,462.

Chartwatchers are targeting levels of $1,425 and $1,400 as near-term downside levels for aluminium. Copper in fairly thin trading moved lower under broker, bank and chart-based selling.

Several traders expected a short-covering bounce to emerge in the copper market but they still believed prices would test levels below $1,900 over the coming weeks.

With longs and banks unwinding their positions at the moment , one copper trader said.

Last business was at $1,918, down $6. Nickel finished at $7,650, against $7,700.

Traders said they expected further gains given its recent impressive $400 chase higher from levels prevailing a week ago.

News of a furnace explosion at Inco's Indonesian operation helped to underpin nickel against the backdrop of caution ahead of the September 15 labour contract expiry at Inco's Manitoba facilities.

There has also been talk of Russian shipment delays, though major producer Norilsk said output and exports were on track.

Zinc drifted lower to $1,015, versus $1,022.50, while lead settled at $817, a 50 cent loss.

Tin was at $6,210, down $20, while alloy was at $1,245, against $1,270.