Zinc Low On Stock Build, Copper Quiet

Copper prices moved in thin pre-market trade on Monday ahead of "Third Wednesday" pricing while zinc dipped when LME stocks showed a hefty increase.

A large European merchant sold just ahead of the 0800 GM

T stocks report showing the 12,200-tonne net rise, which had been expected, a trader said.

But then prices stabilised on short covering and were last at $1,340 per tonne, down $8 from Friday's afternoon kerb close.

An increase in LME zinc inventories was on the cards but traders were surprised that they showed up in the US at the St. Louis warehouse where stocks jumped by 12,475 tonnes instead of at Singapore.

 

"It may be just for effect or they may be taking advantage of high premiums in the US which are around six cents," one trader said.

Broker Brandeis said technical signals show the market needs to cool off after surging to a fresh high of $1,358 on Friday. "The appearance of a 'hanging man' reinforces our view that the market is due for a correction. The RSI has risen to 73 indicating the market is overbought," it said.

Copper barely blinked after stocks fell by 2,100 tonnes resuming a trend of eroding inventories.

Prices were last at $2,461 down $5, and activity was thin with most of Europe closed for a public holiday, and many players in Seville, Spain, for Metal Bulletin's International Copper Conference. "We've only done half a dozen trades between us so far," one senior trader said.

In later Third Wednesday pricing for the May contract, no fireworks were expected. "Copper is pretty well matched," a trader said.Chartists said the market was looking overbought and prices were likely to consolidate.

Aluminium was slightly easier at $1,658, down from $1,666.50 on Friday One trader said Japanese and Chinese players were running short and could be tempted to buy cash. Good support should be seen at the 10-day moving average at $1,656/7.

Other metals were lacklustre and moved little. Nickel firmed $20 to $7,840 and tin edged down to $5,740/55 from $5,760 on Friday.

Lead was indicated at $625/28 versus $630 and alloy was at $1,510/15 after $1,515/17.