Copper Tumbles Below $2,400 Barrier

London Metal Exchange (LME) copper prices tumbled below expected support at $2,400 a tonne in late morning trading.

The move has left the market open to further losses towards $2,350 or lower, traders said after a volatile Wednesday kerb session, traders said.

"The market had been under pressure all morning but the late selling looked to have come from nowhere once $2,400 was lost all hell broke lose," one trader said. Three-months delivery, under sell-stops, at one stage dived to $2,355, its lowest level in seven weeks, before nervous shorts believing the market had been taken down too far covered back to $2,373.

 

This was still well down on Tuesday's LME kerb close of $2,437.

Traders said a further small stocks rise this morning helped to dent a market that was already on the decline. They believed the supply tightness that has gripped the market in the first half of 1997 is now relaxing in slow summer conditions.

The cash to three months backwardation eased to around $115, against Tuesday's high of $145.

Earlier three months delivery copper reached a high of $2,440 on the back of investment fund demand and cash buying, though the market never looked like taking out resistance above $2,450.

The other base metals moved lower with copper in a less dramatic fashion, apart from nickel which lost $115 to settle the morning at $7,055.

Traders said the fall was largely due to a resumption of talks due on Wednesday between unions and managament at Canda's strikebound Inco, Sudbury facilities.

Several suggested that an agreement would be reached after a long dispute.

"Apart from copper, Inco was in the minds of traders," one nickel trader said.

Aluminium eased to $1,568, down $9, but was finding support from another LME stocks fall.

Traders are now looking for support between $1,560 and $1,565 to offset a retracement to $1,550.

Lead was quiet and last indicated at $618/19, against $619. Zinc eased by $5 to $1,392 under profit-taking, while tin settled at $5,570, down $10.

Alloy was quoted around $1,465, a loss of $2.