A drop in oil and gold prices pared early gains for aluminium and copper on the London Metal Exchange, resulting in mixed performance Monday that could mean slightly lower prices early Tuesday, traders said.
A slightly stronger dollar in the afternoon also curtailed investor interest in the metals market, a trader said.
Spot gold prices fell from a high of $648.40 a troy ounce to $640.55/oz while oil declined as much as $1.62 to $61.20 a barrel for January U.S. light, sweet crude futures.
LME aluminium remained in the spotlight given its move above $2,800 a metric ton Friday on the back of positioning ahead of options expiry Wednesday, which could see further volatile prices moves, traders said.
Three-month aluminium extended gains to a fresh near four-week high of $2,835/ton but the $3,000/ton target now appears "too far away," a trader said.
LME lead was the biggest gainer Monday, also rising to a near four-week high of $1,735/ton, up nearly 3% on the previous PM close and within striking distance of lead's November record high of $1,755/ton.
"Lead continues to benefit from bullish fundamentals, as does zinc," the trader said.
LME lead stocks fell by 1,325 tons to 41,825 tons.
Demand from battery producers as well as short-covering helped to drive prices higher, said Michael Widmer of Calyon.
For copper, prices continue to meander around $7,000/ton with bearish data for the U.S. economy Friday still fresh in traders' minds.
However, analysts warned to discount further supply side risks.
Copper remains in a vulnerable position with much of the metal's apparent surplus down to de-stocking, Will Adams at BaseMetals.com said. Low copper treatment charges highlighted the shortage in mine output, which could cause Chinese refined output to shrink and lead to a rebound in imports.
"Overall it looks like consumers have been playing a waiting game hoping for prices to break lower before they restock and that in turn has created a situation that could lead to restocking into a rebound," he said.
In the news, Chile's 425,000-ton-a-year Collahuasi copper mine may repair one of its three SAG mills from January, which could take up to 70 days and would result in a production loss of up to 100,000 tons of copper concentrate, or 30,000 tons of refined metal.
"The copper concentrate market has been tight for the past two years and this shutdown could be quite important while the market is perceived to be pretty tight," copper analyst Peter Kettle at consultancy CRU said.
3 months metal (prices in dollars a ton)
Bid – Ask, Change from Friday PM kerb
Copper 7000.00-7010.00 Up 2.00
Lead 1739.00-17406.00 Up 49.00
Zinc 4445.00-4450.00 Up 55.00
Aluminium 2811.00-2812.00 Dn 4.00
Nickel 33700.00-33750.00 Dn 200.00
Tin 10650.00-10700.00 Dn 25.00
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