London 07/06/2016 - Base metals retreated during Tuesday LME trading, partly correcting lower after the most recent moves to multi-month and multi-week highs in the previous session but also tugged lower by copper, which fell some 2.6 percent to two-week lows.
The reversal in copper, which was at one-month highs above $4,700 yesterday, was accentuated by further inventory increases and a collapse in the long-running backwardation, traders said. Cash/threes months was trading at $4.00 contango by the close whereas last week it had been in a backwardation in excess of $20.
"It has been quite noticeably busier with the markets on the move - no surprise there. And we are seeing some longs getting out and looking to take cash off the table," a trader said.
In today's data, US first quarter non-farm productivity fell 0.6 percent as expected in its final revisio, but the June IBD/TIPP economic optimism index was 48.2 against a predicted 49. Earlier, the EU revised GDP came in slightly better than expected at 0.6 percent.
Now attention switches to China - trade figures are scheduled for Wednesday, with the CPI and new loan figures for May tentatively scheduled over June 10-15. Markets will be looking to the impact of renewed weakness in the Chinese currency, which has slipped to a five-year low against the dollar.
Trading in China is expected to slow, however, because businesses will close for the Dragon Boat festival on Thursday and Friday.
In the metals, copper was last at $4,568 per tonne, down $120 on Monday's close, amid turnover of 29,000 lots.
In today's warehouse data, copper stocks surged a net 21,825 tonnes to 196,225 tonnes, a move centred on Singapore and Kaohsiung. Yesterday, 20,725 tonnes of copper arrived in warehouses in Singapore and Korea - Chinese copper smelters continue to deliver metal into LME-listed warehouses in Asia because of attractive warehouse incentives and while the physical market is lacklustre, traders said.
"With today's detail on just how much was warranted seen by the market spreads have taken a further kicking... the long holder will therefore not have been too happy," Macquarie noted.
A dominant warrant holder remained in both the cash and 'Tom' positions at more than 90 percent.
In others, aluminium bucked the trend and was $10 higher at $1,563. Earlier, stocks and cancelled warrants both fell 6,650 tonnes to 2,494,975 tonnes and 1,107,850 tonnes respectively.
Nickel finished at $8,580, down $180 - yesterday it hit two-week highs. This morning, inventories climbed 738 tonnes to 396,498 tonnes but cancelled warrants climbed 4,050 tonnes to 123,378 tonnes.
Lead, also at two-week highs on Monday, finished at $1,709, down $32.50; stocks were unchanged. Zinc concluded at $2,002, a $24 loss. Stocks fell 800 tonnes to 379,075 tonnes.
Tin ended at $16,900, a drop of $45 - stocks fell 410 tonnes to 6,720 tonnes.
Steel was last at $115/165, cobalt at $23,750/23,900 and molybdenum at $14,800/15,300. Cobalt stocks and cancelled warrants both slipped two tonnes to 635 tonnes and 51 tonnes respectively.
(Additional reporting by Ewa Manthey, editing by Mark Shaw)