LME morning trading-Base metals were hit by profit-taking

fastmarkets-Base metals were hit by profit-taking and book-squaring during LME morning trading on Thursday December 22, with the market winding down ahead of the end of the year. Also weighing on the complex was the slump in refined copper imports to China in November – they fell 22.9% year-on year, although they were up 45.8% on October. LME morning trading Further selling pressure on the base metals is likely over the next few sessions, with many market participants now absent until the start of 2017. “A correction is expected and we may see lower [prices] towards the end of the year and into the first quarter. But there seems to have been a step change and the mood is better,” an analyst said. “The Chinese New Year falls in mid-January and this may curtail activity but the thinner liquidity could see more volatility in the first quarter,” he added. In data, core durable goods orders, the final GDP reading, unemployment claims, the core PCE price index, personal spending, the CB leading index and personal income are all due from the USA later today.  
The three-month lead price at $2,138 per tonne was down $43 on Wednesday’s close, succumbing to pressure from a surge in stocks. LME inventories rose a net 11,700 tonnes to 195,950 tonnes, a move centred on Vlissingen. The three-month copper price at $5,463 per tonne was down $52 and around one-month lows. Stocks dropped 3,825 tonnes to 335,800 tonnes but this was offset by 3,675 tonnes of cancellations – cancelled warrants now stand at 118,450 tonnes. Available LME stocks remain at high levels despite two consecutive days of declines. Several participants said they expect further arrivals in Asian warehouses by the end of the year. The three-month aluminium price at $1,722 per tonne was down $3. Stocks rose 5,025 tonnes to 2,139,575 tonnes and cancelled warrants climbed 4,375 tonnes 652,900 tonnes. Despite more than 22,000 tonnes arriving in the LME system this week, a backwardation remains in play. The benchmark cash/3-month spread closed yesterday at a backwardation of $12.50 per tonne while cash/Jan and cash/Feb were at respective backs of $10 and $10.85. “I think certain LME traders are playing the aluminium spreads very well. [They are] using the tightness to spook the market into playing up big premiums for spot material,” an LME warrant trader said. The three-month nickel price at $10,660 per tonne was down $170. Stocks were unchanged. The three-month zinc price at $2,562 per tonne was $58 lower; stocks fell 175 tonnes at 428,875 tonnes. The three-month tin price slipped $65 to $20,840 per tonne while stocks continue to rise – they climbed another 115 tonnes to 3,715 tonnes. Steel, cobalt and molybdenum were neglected. Cobalt stocks rose nine tonnes to 680 tonnes.

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