LME Market Report: Copper Falls Lower During Friction, Dragging Other Metals

LONDON, October 13: The London Metal Exchange (LME) base metal was pulled back from the early morning highs on Thursday in an open outcry trade, subject to falling and sharp fluctuations in copper prices.

Traders said, “Without selling, prices have already been pushed down. Maybe this is exactly what the market needs, because from a technical point of view, the market is overheated.”

The spot contract reverse spread has fallen from 180 US dollars to approximately 150 US dollars in recent days, triggering investors to take profits.

The news that the CEO of Refco was arrested for the scandal further affected market sentiment.

Dealers said that they should be alert to the possibility of a sharp consolidation of copper prices. In 2004, during the one-week meeting of LME, the copper price fell to a record high.

Three-month copper fluctuate within the wide range of 3,840-3,931, compared with the final closing price of US$3,838 per ton, which is lower than the closing price of Wednesday's composite trading of 3,905.

Copper failed to rise further above the record high of US$3,984 hit on Wednesday, leaving traders worried that the copper was sold, but investors remained cautious about the sell-off.

"This year's short quilt has been rigged too many times. If copper falls by 200-300 U.S. dollars, many people may want to be short," another trader said.

LME copper stocks fell by 1,600 tons to 69,150, and have now fallen by 15,000 tons from the 11-month high hit at the end of September.

Mineral stocks were also hit. The sharp decline in minerals and oil stocks dragged the British FTSE 100 down to a six-week low.

** Aluminum decline limited**

Three-month aluminum was slightly lower, slipping only $24 to $1,930 per ton, and a modest technical squeeze limited the market's decline.

Spot / three-month aluminum reverse price difference of 8 US dollars, Wednesday was 19 US dollars.

Three-month zinc fell from 1,480 dollars yesterday to 1,476 dollars per ton, and three-month lead remained unchanged at 945 dollars.

Three-month tin fell by US$100 to US$6,450/475 per ton, and three-month nickel also fell by US$495 to US$12,200. Nickel fell by a large margin and hit a low of US$12,150/ton during the session.