20000405

London metal prices mostly lower

LONDON: Base metal markets managed to edge off mid-afternoon lows in late Tuesday LME trading, but most contracts ended down after a day in which sellers were predominant, traders said.

Technical sales mauled nickel and aluminium, with these metals dropping to one-month and 4-1/2 month lows respectively. Zinc was also dumped to a one-month low, while copper briefly threatened to crumble below $1,750.

"The sentiment is pretty poor in the market at the moment, and that is why we are not seeing the higher prices that were expected at this time of the year," one trader said.

Analysts at stockbroker HSBC said price falls were against a background of genuinely strong consumer demand. However, consumers were unwilling to chase the markets higher, and as soon as prices start moving up, buying interest disappeared.

"...It is looking increasingly likely that the second quarter rally we are all looking for (and there is an almost universal consensus that prices should be moving higher) will be much more subdued than we were hoping for a few weeks ago," HSBC added.

Nickel business was erratic, with liquidation and sell-stops initially driving the market under important support around $9,675/9,700.

Trade buying and short covering prompted a partial recovery, with final business at $9,710 a tonne, still down $80. At one point the market had been nearly 2.5 percent lower.

Despite a further fall in LME inventories and upcoming labour talks at Falconbridge's FL.TO Sudbury operations, the market was ignoring fundamental considerations, with funds seen selling, traders said.

Aluminium was initially steady, partly helped by a 3,075-tonne inventory fall. But once $1,530 was broken, a decline was accelerated by sell-stops, and at one stage a test of $1,500 seemed likely.

"Technically, it looks awful at the moment. It has been a 'sell' since it went under $1,600," the trader said.

Last kerb business was at $1,518, down $18 from Monday.

Copper briefly succumbed under $1,750, but proved fairly resilient to end just $2 lower at $1,754. However, its technical picture was looking bearish, analysts said.

"The market needs a 200-day MA regain on a close to negate a $1,720 downside projection," LME trader ScotiaMocatta said in a technical report.

Zinc followed the complex's main players lower, eventually easing under $1,100 to close at $1,097, a $17 loss. The stern rebuff overhead recently at the 30-day moving average around $1,127 suggested that the downside would be favoured now.

Lead closed at a steady $449, but was wary following Monday's losses when prices were hit by U.S. and Chinese sales down to a six-year low of $445.

Tin closed at $5,400, down $15, matching the general trend and lacking Monday's influential buying.

Alloy staved off a fall under $1,200, but still closed $7 easier at $1,215, depressed by Monday's chart breakdown and a 220-tonne inventory increase.

Silver saw no interest and ended at 499/502 cents an ounce, down from a previous 501/506 cents.-Reuters