Base metals close lower in London on profit taking

Profit-taking and liquidation pressured base metals across the board at the London Metals Exchange Tuesday, despite a brief rebound earlier in the day, with copper unable to hold the 200-day moving average, analysts said.

Three-month copper has been hovering around the 200-day moving average of $6,882.50/ton all day Tuesday, but the metal fell late to trade at $6,840 a metric ton, just off Tuesday's low of $6,800/ton.

Despite holding up well earlier in the day, metals across the board are looking soft, unable to push above key price levels, said William Adams of BaseMetals. Profit-taking as well as liquidation weighed on prices, Adams said.

In addition, Calyon's Michael Widmer said softer-than-expected U.S. retail sales may also have had some influence on the downward pressure seen in metals prices.

Copper needs to break above the key psychological $7,000/ton level while nickel needs to push above $30,000/ton and zinc above $4,250/ton, said Adams. However, if metals prices break their recent low levels, it may trigger the influx of further liquidation, said Adams.

According to LME warehouse data, copper stocks increased Tuesday morning by 625 metric ton to 151,925 tons.

Meanwhile, news of CalPERS, the largest pension fund in the U.S., allocating $500 million to commodities has strengthened the market's outlook somewhat, a trader said earlier.

Also in the news, a protest blocking the sole access to Corporacion Nacional del Cobre de Chile's El Teniente copper mine in central Chile ended Tuesday without causing a loss of output, the company said in a statement.

Earlier, subcontracted staff blocked the road to the mine to demand higher wages from services company Central de Restaurantes. El Teniente, the world's biggest underground mine, produces some 440,000 tons of copper annually, along with 5,250 tons of molybdenum.

Meanwhile, three-month nickel prices took a dive late in the day on fund liquidation driven by a lack of buying interest, said a base metals analyst.

Nickel traded to a low of $28,350/ton, but have since rebounded to $29,200/ton.

Three-month zinc and lead consolidated Tuesday after posting sharp declines in both markets Monday.

Zinc fell nearly 2% to trade at $4,160/ton Tuesday, down from an earlier high of $4,310.50/ton. Lead fell nearly 4% Tuesday to trade at $1,500/ton, up from Tuesday's low of $1,475.50/ton.

"The selloff continues, with lead prices driven down, after breaking key support at the $1,500/ton price level," said Widmer.

3 months metal (prices in dollars a ton)
Bid – Ask, Change from Monday PM kerb

Copper 6845.0-6850.0 Dn 90.00
Lead 1485.0-1486.0 Dn 85.00
Zinc 4135.0-4140.0 Dn 110.00
Aluminium 2686.0-2687.0 Dn 27.50
Nickel 29200.0-29225.0 Dn 650.00
Tin 9800.0-9850.0 Dn 100.00