Base metals

DJ LME Review: Base Metals Remain Range-Bound; Seen Volatile
LONDON (Dow Jones)--London Metal Exchange base metals stayed inside their recent trading ranges Thursday but traders expect further price volatility as the market searches for clearer price direction.
"Markets were overall lower Thursday but the prevailing view has been to sell into strength and buy back to make profits," said one LME trader. Volumes have been quite active but the markets have been content to remain range-bound, he added.
Speculative buying helped three-month tin prices buck the general weakness, said one broker, as prices rose nearly 3% to a PM kerb of $12,150 a metric ton from Wednesday.
Adding to price support was a fall in LME tin stocks by 115 tons to 10,610 tons Thursday, the lowest level for LME tin stocks since November 2005, according to Barclays Capital.
Moreover, concerns over changes in regulations governing Indonesian tin exports are underpinning prices, the broker added. Recently, tin prices have rocketed to record highs of $12,500/ton due to Indonesia's recent shutdown of private mining and smelting operations on Bangka island, where the country's largest tin reserve is located. The South Asian country produces about one-third of the roughly 360,000 tons of the world's annual tin output.
In other news, tin industry specialist ITRI said Thursday that global tin consumption increased nearly 9% during 2006 from the year earlier, driven primarily by strong growth in the electronics sector and expansion of lead-free soldering.
Three-month aluminum rose above the 200-day moving average, up roughly 1%, to a PM kerb of $2,688/ton from Wednesday in very heavy electronic trading volumes.
A broker commented that it appeared that someone looking to liquidate a large position had found willing buyers. Earlier, the metal fell to a one-month low of $2,628/ton triggered by an increase in LME aluminum stocks by 3,275 metric tons to 755,825 tons Thursday.
Aluminum prices would need to break $2,590/ton before it triggers any major downside activity, said one LME trader. Prices fell overnight in Asia due to fund liquidation, according to two London traders, which spread weakness into the rest of the base metals complex.
Three-month zinc fell 1.5% to a PM kerb of $3,115/ton from Wednesday while copper fell nearly 1% to a PM kerb of $5,415/ton. However, both metals remained within their recent ranges.
Nickel prices also fell nearly 1% to a PM kerb of $35,450/ton triggered by an increase in nickel stocks by 534 tons to 3654 tons Thursday morning with canceled warrants - or material accounted for and to be drawn down at a later date - easing to 17% from 19% Wednesday.
In other news, LCH.Clearnet, which clears trades for the London Metal Exchange, has lowered its initial margins for nickel, copper and zinc, and hiked them for lead and tin, the clearing house said in a notice to members seen by Dow Jones Newswires Thursday.
The changes will be effective close of business on Feb. 14 and will be reflected in margin calls on Feb. 15.
Meanwhile, LCH.Clearnet said it has lowered initial margins for the new LMEmini copper and zinc contracts, launched Dec. 4.
LMEminis are cash-settled, monthly contracts, electronically traded on the exchange's electronic trading platform Select and in smaller tonnages than typical LME contracts. Prices in dollar a metric ton.
3 Months Metal Bid-Ask Change from
Wednesday PM kerb
Copper 5415.0-5420.0 Dn 5
Lead 1574.0-1575.0 Up 14
Zinc 3115.0-3120.0 Dn 75
Aluminum 2688.0-2690.0 Up 33
Nickel 35450.0-35500.0 Dn 400
Tin 12150.0-12175.0 Up 350
Aluminum Alloy 2190.0-2200.0 Up 10
Aluminum Alloy 2100.0-2110.0 Up 19