Prices Stay Subdued In Early Trading

Base metals held little changed levels in quiet early Wednesday London Metal Exchange (LME) trading as the market found few incentives to move amid the lack of market-related news and strong consumer interest.

The release of LME stocks failed to stir the market which looked to be entering a period of consolidation in the traditionally slow summer period.

Light consumer forward buying helped to lift aluminium to $1,588 a tonne, up $4 from Tuesday's LME kerb close. Traders said a fall in LME stocks of 3,100 tonnes was supportive though largely expected following a long string of declines.

The last time LME aluminium stocks registered a rise was on May 20 when they came in 2,000 tonnes up. Traders said the daily falls were becoming routine and expected, though one aired caution saying that "nothing falls for ever."

 

"Eventually stocks will register a rise which is likely to panic the market and send prices lower in seconds," the trader said.

Opinions on the stock declines vary. Several traders suggest that the stocks are being used by end-users, while others said the material was tied up in financing deals.

Physical traders estimated that between 2,00,000 and 2,50,000 tonnes could be involved in the deals. Another theory

was that the stock was moved into consumer yards in an effort to

cut costs. Traders said that support for aluminium was available at $1,565, while they pegged

resistance at $1,600 and Friday's high of $1,608. Copper was unmoved by a stock rise of 300 tonnes. "It was neither here or there," one trader commented. Traders said they expected business to remain slow ahead of later LME ring trading.