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Base metal prices mixed on LME

LONDON: Copper prices managed to claw back some of this week's losses on the London Metal Exchange (LME) on Thursday, but most traders viewed the action as a correction within a wider downtrend.

Dealers said the market had got itself short of copper during the last few days, and wanted to cover short positions and square up books ahead of the long holiday weekend. The LME will be closed on Friday and Monday, re-opening Tuesday April 9.

"We've seen booksquaring and short-covering. Except for copper, most of these markets seem to have found levels from which they don't want to go any lower for now," a trader said.

Three month copper futures ended the afternoon kerb at $2,476 a tonne, up $10 from Wednesday's afternoon kerb close.

Traders noted news of ongoing talks between giant Chilean producer Codelco and workers at the huge Chuquicamata copper mine. Unions said they had not ruled out strike action if talks failed. The current labour contract runs out on April 30.

"We will wait and see for further news...Codelco is in the background at the moment," said one LME trader.

Cash held steady at around $10 above three month prices, but the limited backwardation was unlikely to support values for long, according to some analysts.

"The back(wardation) is now just $10 a tonne and the tsunami of new copper supply will cap the upside whilst the cavernous price downside beckons ominously," said Nick Moore, analyst at Flemings Global Mining Group.

Chart support was pegged at $2,456 and $2,440, the 1996 low.

Aluminium edged lower towards the close, ending $6 down at $1,630.50. Despite this week's losses, some traders said support at Wednesday's low of $1,624 appeared strong and should hold in the short to medium term.

Lead perked up, supported by genuine physical tightness as well as the threat of technical squeezes in the coming months.

One trader said he expected prices, spreads, or both to flare up again in June. The LME intervened in the lead market last month to limit the level of nearby spreads.

Three month lead futures finished $12 higher at $798 having briefly touched $800.

Cash widened to $27/30 above three month values from $18 late on Wednesday.

Zinc followed its sister metal higher, gaining $10 to $1,077 in a short-covering rally.

Prices remained firmly locked in a downward price channel signalling resistance at $1,085 and support at $1,060.

Nickel and tin were bolstered by the firm trend overall. Nickel put on $30 to $8,115 while tin edged up $5 to $6,420.

Alloy finished the shortened week at $1,405 from $1,405/10.-Reuter