London 25/01/2016 - Base metals reverted to the lower ends of the day's routine trading ranges during late-Monday LME trading - earlier stability dissolved in the face of weaker oil prices and negative fundamentals, traders said.
"The market looks to have found a bit of rut today - it is not going up much as the oil bounce has run its course. On the other hand, the market is, on balance, short so it is a bit rangy for now," a floor trader said.
An oil-led rally provided some support to base metals prices on Friday. Benchmark crude oil prices, which sank below $27 last week before recovering rapidly to above $30 per barrel, were back under pressure today and remain around 12-year low levels due to oversupply. On Monday, from early highs above $32, they dropped back to around $30.80 recently.
In other markets, equities swung from opening advances to lower trends by the afternoon. There was little significant economic data today.
"The US FOMC meeting [on January 26-27] is a bit of a reason for holding fire right now for the money players as well," the trader said.
The FOMC statement on Wednesday might shed light on policy intentions and the US economic outlook. The market will focus on comments to see if appetite to tighten policy has cooled given a softer global growth outlook for this year.
In the short term, the metals complex is likely to see reduced business flows while prices remain broadly rangebound.
"Coming up to the end of the month, a lot of people will have been bruised by what has happened so they will look to keep away until next week," another trader said.
In the metals, copper, which had probed towards $4,500 this morning, spent the latter part of the day threatening to break back below $4,400. Final business at $4,417 per tonne was down $26 on Friday's close.
In the spreads, the benchmark cash/threes backwardation was little different from Friday at $3.00. In today's warehouse data, copper stocks climbed a net 1,475 tonnes to 238,825 tonnes and cancelled warrants rose 1,425 tonnes to 57,850 tonnes.
Aluminium was last at $1,476, down $5.50. Inventories and cancelled warrants both fell 5,325 tonnes to 2,825,425 tonnes and 933,325 tonnes respectively.
Nickel fell $150 to $8,750/8,755 - this morning stocks dropped 624 tonnes to 449,550 tonnes, while cancelled warrants fell 3,708 tonnes to 173,712 tonnes, a move centred on Kaoshiung.
In others, zinc managed to buck the general trend - it concluded at $1,515, up $5. Stocks and cancelled warrants both fell 925 tonnes to 479,925 tonnes and 91,150 tonnes respectively.
Lead fell back to end at $1,622/1,623, a $16.50 loss - stocks fell 825 tonnes to 187,900 tonnes. Tin ended at $13,650, down $40 - today inventories fell 35 tonnes to 5,945 tonnes.
Steel was unchanged at its customary $185/235, cobalt was indicated at $21,900/22,100 and molybdenum at $11,500/12,000.
(Additional reporting by Ewa Manthey, editing by Mark Shaw)