Metals Up On Lacklustre Options Day

Base metal markets scraped small gains in a routine options declaration session on the London Metal Exchange (LME) on Wednesday.

Dealers said they expected further losses in copper and aluminium despite a mild reprieve in the rings that saw both edge higher.

Even at these levels, the producers are still making money. I think we're in for a period of even lower base metals prices, said a trader.

Options activity was limited mainly to aluminium where puts with a strike of $1,500 were declared but this had little impact on muted rings.

Copper stabilised at $1,710, up $8 compared with Tuesday's afternoon kerb close and just short of the ring high.

 

While traders noted sporadic consumer interest from the Far East and better physical interest generally, most saw lower LME prices just around the corner.

I think we could easily see $1,680 this week, then $1,650 and lower, said a trader.

News that the strike at Alcatel's SCCC plant - which has the capacity to consume 1,000 tonne of cathode per month - had ended made little difference to an already oversupplied market, said dealers.

Falling copper was seen weighing on the rest of the base metals, particularly aluminium which was set to uncover sell stops below $1,500, traders said.

However, steady-volume mid-session trade took aluminium $1.50 higher to $1,515.

Tin took out resistance, capitalising on Tuesday's gains and rising $20 to $5,255. Next resistance lay at $5,270, chartists said.

Zinc was not roused by news from Ireland's Galmoy mine that it had declared force majeure as a result of a strike. Last business was at $1,099, unchanged.

Nickel wavered before closing $20 lower at $5,410, still in in the broad $5,350/$5,500 range but looking weak, according to traders.

Lead did very little, gaining $3 to $532, while alloy finished the morning indicated lower at $1,335/40.

New York: Comex copper futures were expected to open little changed Wednesday in line with LME prices despite a further rise in LME copper stocks.

Comex March copper was called unchanged to up 0.30 cent from Tuesday's close of 76.75 cents a pound after trading from 76.80 to 77.20 cents on ACCESS.

Copper prices retreated sharply Tuesday, giving back some of the gains.

Made in the past two weeks as prices struggled to recover from four year-lows seen in early January.

LME warehouse stocks rose by 2,050 tonne to 370,325 tonne in Wednesday's data, the highest since early 1994, while Comex warehouse stocks were up 202 short tons at 101,975 short tons.

Analysts remain pessimistic about the outlook for copper, given the annual supply surpluses forecast for the next few years while Asian demand is seen falling due to the recent financial turmoil.