London 26/05/2016 - Base metals reversed direction during the latter stages of LME trading on Thursday - an early corrective rally petered out while spot crude oil prices were struggling to stay above $50 per barrel, a level regained for the first time this year.
"The big picture is not changing, really, and it will only get slower next month once the fund rolls are out of the way," a floor trader said.
Copper was sent back below $4,700 per tonne, with rest of the complex also trooping back. The bounce today, following consistent falls this week, was unsurprising but eventually unconvincing.
"Despite the better tone, it has not been busy and there is not too much conviction in the moves. Oil has got back to $50 but once the shorts there get shaken out it may not hold and we could see the same in the metals," the trader added.
Spot Brent crude - as high as $50.48 earlier - dropped back to a little-changed $49.80. The dollar was at 1.1185 against the euro, down from seven-week highs touched earlier this week.
A batch of positive US figures did little to generate follow-though in the complex to the day's initial trends. April pending home sales rose a much-better-than-expected 5.1 percent - a 0.6-percent rise had been forecast.
Among other data, weekly jobless claims were 268,000 against a predicted 275,000, while the more-consistent April durable goods orders increased slightly more than expected by 0.4 percent.
With London markets closed on Monday for a national holiday, prices could turn choppy on Friday on book-squaring, while end-month and pre-June option expiry considerations will also be in play.
In the metals, copper, which had peaked at two-week highs of $4,712, fell back to end the kerb at $4,661 per tonne, up just a modest $7 from Wednesday.
Earlier, warehouse inventories rose a net 725 tonnes to 155,975 tonnes after Gwangyang stocks climbed 1,500 tonnes. Further increases here are probable due to favourable warehouse incentives, traders said. While 1,600 tonnes arrived in Singapore, another 1,500 tonnes were removed.
Cancelled warrants continued to build up in New Orleans - freshly cancelled material rose 4,175 tonnes. The increases here have been attributed to a trading house attempting to tighten the market. Total cancellations climbed 2,350 tonnes to 47,600 tonnes.
Aluminium was last at $1,555.50, up just $1.50. Spreads have started to show some tightness, with cash/threes last at a contango of just $6.75.
Cancelled warrants may ratchet up the tightness - cancellations increased 13,075 tonnes to 1,141,400 tonnes due to a fresh clip of 17,000 tonnes in Vlissingen. Stocks fell 4,425 tonnes to 2,539,900 tonnes.
Nickel ended at $8,400, up $45, although traders were surprised that increases have not been more substantial after positive Chinese import data earlier this week.
Stocks fell 978 tonnes to 400,896 and remain at December 2015 lows. Cancelled warrants jumped 3,810 tonnes to 129,540 tonnes after 4,386 tonnes were freshly cancelled in Kaohsiung.
Among the rest, zinc finished at $1,876, up $40, having traded at a one-week high of $1,893 today, underpinned by a flurry of borrowing in a tight nearby market.
Cash/threes flipped from around level to $2.25 backwardation at one stage. Headline inventories and cancelled warrants were both down a meagre 50 tonnes.
Lead concluded at $1,676, a $26 advance - stocks and cancelled warrants both fell 275 tonnes to 185,275 tonnes and 73,750 tonnes respectively.
Tin closed $225 higher at $15,850, bouncing off the Wednesday lows, which were the weakest since mid-February. But stocks continued to increase - at 7,045 tonnes, they were up 65 tonnes and at their highest since August 2015.
The increases have eased the backwardation - cash/threes was last at $21.50, having been at more than $175 earlier this year.
In the minors, molybdenum was static at $14,800/15,300 but is now substantially out of line with the free market. Prices there are at 16-month highs of $8.25/8.75 per pound, up around $1.50 from a week-ago levels. The LME price equates to $6.80 per pound.
Steel billet was indicated at $65/115 and cobalt at $23,000/23,500.
(Additional reporting by Kathleen Retourne, editing by Mark Shaw)