London 09/06/2016 - Base metals ended a patchy Thursday LME session mostly lower, with prices pressured after a steady start by losses in copper, profit-taking and the firmness of the dollar, traders said.
Copper in particular was weighed down by the market's definitive move into a contango structure, as metal continued to build up in warehouses, prompting surges of technically based sales from investment funds.
The market moved below $4,500 per tonne, marking a four-month low, while among the other metals zinc retreated from 11-month highs, aluminium, lead, tin and nickel came off their best levels for one month.
In other markets, the dollar reversed direction by the latter part of the session, advancing to a steadier level against the euro around 1.1320.
In today's data, US wholesale inventories rose more-than-expected by 0.6 percent, while the latest weekly jobless claims were close to forecast at 264,000.
Earlier, data issued by China showed the CPI running at a two-percent increase in May - it was expected to be 2.3 percent. But its PPI fell 2.8 percent, an improvement on the 3.4-percent decline in April.
Business flows were patchy, as volumes and participation were initially impacted by the start of the two-day China Dragon Boat Festival, with markets closed. End-week activity may well by volatile at times on Friday.
In the metals, copper continued to struggle, undermined by continual warehouse stock falls and the reversion to a contango. It fell as low as $4,483.50 per tonne, before last trade at $4,516 per tonne, a $62 loss. Earlier, inventories rose a net 5,925 tonnes to 213,225 tonnes, the highest since February 16.
Since hitting three-week highs of $4,748 on Monday, copper prices have shed some five percent, while the market's nearby spread structure has swung decisively from backwardation to contango. The benchmark cash/threes rate traded at $14.50, the widest contango since December 2015. For most of 2016 it has been backwardated - it was as high as $27 at the end of May.
Zinc traded last at $2,069.50, still up $7.50 - it had hit $2,105.50 this morning, an 11-month high on follow-through rechnical momentum-based buying. Warehouse stocks were down 1,250 tonnes to 380,900 tonnes.
Aluminium, which was boosted by consumer buying in the previous session, ended $27 lower at $1,577. Stocks dropped 6,700 tonnes to 2,481,625 tonnes and cancelled warrants fell 3,700 tonnes to 1,097,475 tonnes.
Nickel rose as high as $9,145 today, but hit overhead resistance - it closed at $8,930/8,940, a $60 loss. But stocks were down 768 tonnes to 394,746 tonnes and cancelled warrants fell 1,146 tonnes to 121,170 tonnes.
Lead finished at remained $7 higher at $1,742 although stocks were up 550 tonnes at 185,950 tonnes and cancelled warrants climbed 100 tonnes to 73,650 tonnes. Tin was $65 lower at $17,025 at the close, while stocks and cancelled warrants both fell 65 tonnes to 6,665 tonnes and 1,625 tonnes respectively.
Steel was indicated at $165/215, cobalt at $23,750/24,250 and molybdenum at $14,800/15,300.
(Editing by Tom Jennemann)