A stabilizing dollar pushed copper prices sails Thursday, adding to long liquidation pressure that triggered technical selling, traders and analysts said.
LME three-month copper pierced downside support at $6,800 a metric ton to fall to an 18-day low of $6,792.50/ton, down 2.8% from the Wednesday PM kerb.
The dollar settling into a sideways trading pattern in the days before the European Central Bank's interest rate decision has caused copper's rally to stall, John Reade at UBS said.
This coupled with follow-on long liquidation after Wednesday's option expiry that passed without the expected gains have moved concerns for the metal consumption in the U.S. back into focus, analysts said.
"Options expiry meant the market could forget U.S. economic worries for a couple of days. Now small amounts of systems selling are sufficient in an illiquid market to bring prices down," Reade UBS said.
LME zinc also came under pressure from systems selling and fund profit taking to fall to an 18-day low of $4,240/ton, down 4.3%.
A rise in LME zinc stocks by a net 1,175 tons to 87,700 tons following a delivery into LME warehouses in Singapore may have contributed to the pullback, a trader said, but the delivery was unlikely indicating falling demand for the anti-corrosive metal.
Friday's focus for the market will be U.S. November non-farm payroll data at 1330 GMT, forecast to rise by 110,000 at an estimated unemployment rate of 4.5%.
Copper also looked to a strike threat at Xstrata's Alunorte copper smelter, where workers may walk off the job over the weekend. The smelter produces around 300,000 tons of copper per year.
Workers at Chile's Codelco have started contract talks this week with contract expiry on Dec. 31. The talks are for Codelco's largest, the Norte division.
LME aluminum fared better after heavy liquidation pressure in late trade Wednesday when some bargain hunting led to a rebound.
Other LME contracts were steady close to all-time highs.
3 months metal (prices in dollars a ton)
Bid – Ask, Change from Wednesday PM kerb
Copper 6890.00-6895.00 Dn 95.00
Lead 1707.00-1708.00 Dn 18.00
Zinc 4285.00-4290.00 Dn 145.00
Aluminium 2817.00-2820.00 Up 37.00
Nickel 33700.00-33750.00 Dn 500.00
Tin 10725.00-10750.00 Up 25.00
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