LME metals mixed, Lead dips to a five month low

London Metal Exchange lead dived 13% to a five month low on profit-taking after another decline in copper prices below key technical indicators dented sentiment on the LME, traders said Monday.

LME copper sharp correction to a five-month low of $6,761 a metric ton and loss of the 200-day moving average precipitated further selling pressure, traders said.

"The whole complex looks toppy and there's a feeling macro-funds are withdrawing some of their positions. There's a perception that commodities have done well this year so some macro funds may choose to get out," said Malcolm Freeman, head of trading at Ambrian Partners Ltd.

After withstanding selling pressure on the LME flagship copper contract Friday, lead and zinc succumbed to a sharp correction.

Lead fell 13% from the Friday PM kerb to a one-month low of $1,450/ton after adding 27% since the start of October and hitting a record $1,755/ton in early November.

After breaking the 50-day moving average, lead's rally was likely over, Stephen Briggs at Societe Generale said.

"I think the wind has been taken out of lead for the longer term. For zinc the story of very tight short-term fundamentals, then a massive increase in supplies hasn't changed," Briggs said.

Lead's freefall was also down to the contract's small size and relative illiquidity, Michael Skinner at Standard Bank said.

"We're seeing a correction as lead prices were in severely overbought conditions," Skinner said, who eyed $1,400/ton as a support level.

Regaining technical levels and the $7,000/ton soon would be key in copper's near-term direction, traders said.

"We will need several weak closes this week for people's indicators on their systems to indicate to get out (of positions)," Freeman said.

Copper, lead and zinc pared some losses towards the close but the market remained nervous, traders said.

Copper's sluggish sideways performance since September made a reevaluation among many fund players likely, Briggs said.

U.S. economic data likely to further shape sentiment this week includes October producer price statistics, consumer price index Thursday and October industrial production.

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

Copper 6935.00-6940.00 Up 15.00
Lead 1570.00-1575.00 Dn 100.00
Zinc 4245.00-4250.00 Dn 65.00
Aluminium 2713.50-2714.50 Up 18.50
Nickel 29850.00-29900.00 Up 550.00
Tin 9900.00-n/a Up 150.00