Copper declines on profit booking in LME trade

Print this page Posted on : 12-10-2008 by recycleinme.com

London, Dec. 9

Base metals on the London Metal Exchange reversed on Tuesday as investors used the rally Monday as an opportunity to take profits.

Rallies are forecast to be short-lived because the overall demand environment continues to weaken, analysts and traders said. At 1002 GMT, LME copper was trading at $3,160 a tonne, down 4.5 per cent from Monday's kerb close. LME aluminium was trading at $1,498/tonne, down 1.4 per cent. LME zinc was trading at $1,084/tonne, down 1.6 per cent. LME nickel was trading at $9,225/tonne, down 0.8 per cent.

Copper stocks up

LME warehouse inventories for copper were up 1,850 tonnes and aluminium up 1,600 tonnes and zinc up 6,275 tonnes. European equities were down Tuesday after the Obama-inspired run higher Monday following an infrastructure spending plan he announced over the weekend. The dollar was stronger against the euro. Data out of the US could add further selling pressure on the metals complex. The market will watch US retail sales to Dec. 6 and pending home sales for October. The data is likely to show further weakness inline with the data that has already been published, said BaseMetals analyst Mr Will Adams.

''As such, the markets may shudder a bit this morning and then again when pending home sales data is released this afternoon in the US,'' Mr Adams said. However, LME base metal rallies are going to be short-lived because physical demand is weak, said Standard Bank analyst Mr Leon Westgate. There is potential for further short covering activity over the coming days, but rallies won't turn into a sustained recovery until the physical market picks up, Mr Westgate said.

Source : Business Line