Base metals on the London Metal exchange (LME) have closed lower, with most extending early losses toward the European close after a weakening euro parred demand.
At the close of open outcry trading, LME three-month copper, flagship of the base metals complex, on Wednesday was 0.3 per cent lower on the previous day's settlement at $US8,245 a metric ton. The euro has been falling against the US dollar since the start of the week, reducing the appeal of dollar-denominated base metals. Demand for the metals is lower when the US dollar is comparatively strong.
In an otherwise quiet session, Sucden Financial analysts noted "a lack of any significant economic data for the market to chew on led to a routine day".
The US dollar has benefited in recent sessions to the detriment of the euro, as a resurgence of investor concerns regarding Europe has sent market participants toward assets deemed less risky, such as the greenback.
The euro also suffered as investors reined in some of their long bets on the common currency ahead of a European Central Bank meeting Thursday. The Bank of England also will announce its interest-rate decision and policy outlook Thursday.
In the wider picture for industrial metals, the general consensus the economic indicators are picking up globally is improving sentiment, although this is being countered by concerns about the already elevated levels of metal in the market.
Oversupply concerns are capping any potential rise in copper and aluminum among others, with Natixis cautioning against a rise in copper supply from Peru before long, and tipping a $8,500/ton average copper price over 2013 in a note Wednesday.
Sucden Financial analysts said Wednesday that, with the copper demand outlook improved but mine production increasing, they anticipate a possible small surplus for the red metal.
"But with stocks in firm hands, prices should be well supported at $7,850, with resistance at $8,350/ton," they said.
The firm sees aluminum prices broadly rangebound between $US1,950/ton and $US2,250/ton with upside potential impacted by high stock levels.
Prices in dollar a metric ton.
3 Months Metal Bid-Ask Change from
Tuesday PM kerb
Copper 8245.0-8250.0 Dn 25
Lead 2422.0-2422.5 Dn 38
Zinc 2167.0-2168.0 Dn 9.5
Aluminum 2098.0-2100.0 Dn 14.5
Nickel 18320.0-18325.0 Dn 375
Tin 24825.0-24850.0 Dn 100
Aluminum Alloy 1850.0-1860.0 No change
Aluminum Alloy-NASAAC 1940.0-1960.0 No change
