Copper prices gravitated towards the $2,400 level during Tuesday's LME ring and kerb trading, attempting to settle after a nervous morning when the market ranged between $2,430 and $2,383.
Other metals were mixed although aluminium defended its hold on $1,600 and zinc heated up again to a new 6-3/4 year high.
But the main area of attention was copper, the July spreads and nervousness ahead of Wednesdays option declarations for this month which promise to be lively. At the moment you cannot say what strike is going to be in play. The market is jumping around all over the place, one trader said. Copper fell soon after the opening, tumbling after a 3,175-tonne stock rise on investment selling which triggered delta sales against the imminent options. Also, at that time spreads were softening with July/threes and cash/threes, both nearing $120 backwardation.
On Monday these rates were near $170. However, the market rallied in the official sessions on simultaneous threes months support and borrowing of various July dates. July/threes traded at $125, July/August between $90 and $92, and July to early-August at $75. Last three months trade was at $2,396, still down $26 from Monday's kerb close.
Traders expect a difficult 24 hours trading until the air clears after the option declarations. At present, the July date is between strikes at $2,500 and $2,500.
Once the options are out of the equation, the market may rally as near-term fundamentals are still tight and the July prompt is two weeks away.
Zinc raced to a fresh 6-3/4 year high of $1,435, mostly on speculative buying against a backdrop of underlying technical tightness.
