LME: Copper falls again; Zinc and lead at record high

London Metal Exchange zinc and lead rallied to fresh record highs Wednesday, eclipsing last week's all-time highs after sharply higher oil prices boosted sentiment, analysts said.

Sentiment on zinc took a bullish turn after another sizable LME stock fall, down 1,750 metric tons to 115,600 tons, supporting prices at $3,930/ton, basis three-month, up $35/ton on the Tuesday PM kerb.

LME lead's rally in the afternoon to a record $1,585/ton, up 3.5%, in turn helped push zinc prices, alongside oil rising above the $60-a-barrel level following data showing a stronger-than-expected draw on U.S. oil inventories.

The zinc and lead markets may also eye a decision on nationalization of zinc, silver and tin mines in Bolivia expected for Oct. 31, UBS analyst Robin Bhar said.

Bolivia produces 5.1% of global tin supply, with silver and zinc rising to 4.7% and 3.2% of global output, respectively, once Apex Silver Mines Ltd.'s 200,000-ton San Cristobal project is in full production.

Wednesday's Federal Open Market Committee meeting kept LME copper bound to a narrow range for much of the day.

Market expectations point to the Federal Reserve leaving U.S. interest rates unchanged at 5.25%, but the accompanying statement may contain hawkish language on inflation, which might boost the dollar and in turn trigger some fund liquidation in the base metals market, analysts said.

However, since the dollar has already traded higher against other major currencies this week in anticipation of a hawkish Federal Reserve statement, scope for a further rise may be limited.

Meantime, slightly weaker U.S. housing data on existing home sales dropping 1.9% in September undermined sentiment for the U.S. economy, traders said.

Existing home sales came in at 6.18 million on an annualized basis, versus an expected 6.20 million, pushing LME copper prices into negative territory after a lackluster day.

Copper has been underperforming other LME metals for the past two weeks amid a growing perception that the metal may have seen its highest peaks during the current bull run.

LME aluminium regained upside momentum on the back of higher lead and zinc prices to rise to a fresh five-month high of $2,772.50/ton, up 2.5% following lead and zinc and building on oil's strength.

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

Copper 7455.00-7460.00 Dn 46.00
Lead 1580.00-1585.00 Up 48.00
Zinc 4030.00-4040.00 Up 135.00
Aluminium 2764.00-2765.00 Up 60.00
Nickel 31600.00-31650.00 Dn 600.00
Tin 10175.00-10200.00 Dn 25.00