Base metals retreat on LME

The London Metal Exchange base metals ended the session Tuesday softer as the markets sought direction and attention focused on the forthcoming U.S. Federal Reserve decision on interest rates, traders said.

And with this decision not due until 1815 GMT Wednesday, the LME metals look set to hold in ranges, with recent fundamental news largely factored into prices, traders added.

"The markets are moving away from focusing on their own internals, and are instead nervous ahead of the upcoming U.S. statistics and the Fed meeting," said Man Financial analyst Ed Meir.

A generally softer tone to crude oil futures and the spot gold market also weighed on several of the base metals, particularly copper.

LME copper's upside had been halted from the outset of trade Tuesday by a rise in LME stocks – by 7,750 tons, to 120,825 tons. Of this, 7,025 tons went into warehouses in Singapore, and traders said this is predominantly material originally destined for China that is now "surplus to requirements."

Analyst Robin Bhar of UBS said copper is "on the backfoot, pressured by lower prices on the back of a large rise in LME stocks and falls across the board in cancelled warrants."

LME copper traded around $7,500/ton, recovering from a dip down to $7,362.50/ton to end the kreb session at $7,494/ton.

And LME aluminium's failure to break higher last week left the market struggling to make any fresh upside, traders said.

Three-month aluminium closed the kerb at $2,704/ton, up from a low of $2,668.50/ton earlier.

Elsewhere, the markets that put in the best performances last week – nickel, lead and tin – were generally quiet, although positive supply side factors remained supportive. Analysts pointed to still tight global inventories, steady demand and production disruptions as being supportive in the near to medium term.

LME nickel held around $32,300/ton, with LME stocks still at critical levels of 5,238 tons. Of this, 1,722 tons is on cancelled warrant – indicating it's accounted for and about to be drawn down – leaving just 3,516 tons available, around one day's global consumption.

Supply disruptions continue to hit nickel in New Caledonia, while tin is supported by ongoing worries over the possibility of mining asset nationalization in Bolivia and smelter closures in Indonesia.

LME tin held above $10,000/ton while LME lead held in a range around $1,500/ton, ending the session just $18/ton shy of its all-time high, at $1,532/ton.

U.S. housing sales data and U.S. third-quarter gross domestic roduct data are scheduled for release Thursday and Friday and are expected to provide further direction. Market participants said they will be watching this data for signs of a slowing ecomony as an indication that demand for base metals could be tailing off.

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

Copper 7494.00-7495.00 Dn 46.00
Lead 1532.00-1534.00 Up 22.00
Zinc 3895.00-3900.00 Dn 25.00
Aluminium 2704.00-2705.00 Dn 4.00
Nickel 32200.00-32250.00 Dn 150.00
Tin 10200.00-10250.00 Dn 175.00