LME lead ends down 5% on rising stocks

London Metal Exchange lead prices tumbled over 5% Wednesday, on rising stocks and technical-related selling, with traders expected to keep a sharp eye on general LME stock levels for further price direction as liquidity wanes ahead of the year-end.

Lead prices traded to a low of $1,590/ton, down nearly 8% from Tuesday's kerb of $1,727/ton, before rebounding to Wednesday's PM kerb of $1,640/ton.

Consistent profit-taking after the market failed to hold above $1,700/ton triggered lead's fall, said a base metals trader earlier. The move was largely based on technicals as well as an increase in stocks, he added. Lead pushed past key moving averages including the 50-day at $1,610.73/ton and 10-day at $1,684.19/ton.

Copper and zinc also followed lead's decline due to a rise in inventories.

Copper prices fell modestly below $6,700 a metric ton, before retracing those losses to a PM kerb of $6,715/ton, as LME copper stocks rose by 4,600 tons to 171,300 metric tons.

However, adding to price strength are ongoing contract negotiations at key copper operations in Chile. Corporacion Nacional del Cobre de Chile's Norte division entered into contract talks with its three largest unions last week before their contracts expire Dec. 31 while workers wait for a new offer from Xstrata's Altonorte smelter.

Zinc prices were pressured all day as zinc stocks rose 150 tons to 86,450 tons, according to LME data. In addition, news that Zinifex resumed production at its Century mine in Australia earlier than anticipated added to price weakness, said analysts.

Base metals markets will generally continue to watch LME stock levels and ongoing strike concerns amid low volumes ahead of the year-end, said a base metals analyst.

Meanwhile, tin prices remain above $10,000/ton driven by a drawdown in LME stocks and by ongoing supply concerns over Indonesia's tin production after a recent clampdown on independent smelters. The metal traded up to a high of $10,970/ton before retreating to a PM kerb of $10,945/ton.

LME three-month nickel rebounded from Tuesday's lows as LME stocks fell. The metal traded up to Wednesday's high of $33,401/ton, before retreating to a PM kerb of $33,250/ton.

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

Copper 6715.0-6720.0 Dn 130
Lead 1640.0-1641.0 Dn 87
Zinc 4270.0-4275.0 Dn 105
Aluminium 2798.0-2800.0 Dn 7
Nickel 33250.0-33300.0 Up 450
Tin 10945.0-10950.0 Up 120