London 14/06/2016 - Base metals ranged routinely at mostly lower levels during the Tuesday LME sessions, with sentiment dulled by a firmer dollar and easier equity markets - a trend that is likely to continue in the short term, traders said.
"It has been a bit sloppy today and it looks as if the market is a bit tired at these levels. The dollar has been firmer and oil and equities are off the boil so that's really been the trigger for the selling," a trader said.
The dollar was recently around 1.1215 against the euro while spot Brent crude oil dipped under $50 to around $49.62 per barrel.
"We have to suspect that the jittery tone in global equity markets will continue to cast a pall over commodities over the next day or so," Ed Meir of INTL FCStone said in a report.
Wider markets are hinging on macroeconomic events such as the start of the two-day US Federal Open Market Committee (FOMC) monetary policy meeting and the uncertainty being fanned by the impending UK EU membership referendum. For metals, this could see an overall drift ensue.
The FOMC meeting is expected to provide further signals on when the US might raise interest rates. CME Fedwatch currently implies a sub-two-percent probability the Fed will raise rates this week in the wake of May's weak employment data.
On the data side today, US May core retail sales rose the expected 0.4 percent while import prices increased by a more-than-predicted 1.4 percent. April business inventories were up 0.1 percent, falling short of the forecast 0.2-percent rise.
In the metals, copper closed the kerb at $4,520 per tonne, a $37 loss from the previous close and gearing up to test $4,500. An ever-increasing contango is developing - cash/threes was at $16.75, around its widest since July 2015. In today's warehouse data, stocks and cancelled warrants both fell a net 4,350 tonnes to 203,275 tonnes and 34,625 tonnes respectively.
"Copper is looking vulnerable down here," another trader said. "If the double-bottom support around $4,480 goes, then we could see the sell-stops hit."
Aluminium was at odds with the overall trend, holding above $1,600 and finishing at $1,610, up $10. Its nearby date structure has tightened, with cash/threes now trading at just $1.75 contango and a $1.50 backwardation in place for cash/July.
"Aluminium is just about holding in there - the market is short on the nearbys," the second trader added.
Earlier, the 'Tom'/next' rate traded at a steep $8.00 backwardation. Stocks fell 7,525 tonnes to 2,461,325 tonnes and cancelled warrants rose 2,475 tonnes to 1,087,075 tonnes.
Nickel finished at an unchanged $8,890 - wage negotiations at the Cerro Matoso mine in Colombia have broken down, with a previously announced strike set to start later today. Stocks fell 3,072 tonnes to 390,660 tonnes and cancelled warrants dropped 2,670 tonnes to 116,868 tonnes.
Zinc continued to correct lower from last week's 11-month highs of $2,105 - it ended at $2,019, a $58 loss. The cash/threes spread has widned to $11.75 contango from $6.75-4.75 last week. Stocks, meanwhile, increased 4,000 tonnes to 384,075 tonnes.
Lead fell below $1,700 to hit two-week lows and concluded at $1,685, a $26 loss - stocks and cancelled warrants both edged 25 tonnes lower to 185,900 tonnes and 73,600 tonnes respectively.
Tin closed at $16,975, down $175 - this morning inventories fell 120 tonnes to 6,435 tonnes and cancelled warrants fell 170 tonnes to 1,480 tonnes.
Steel billet continued to be marked higher - it was indicated at $290/340. Cobalt was quoted at $23,500/24,000 and molybdenum at $14,800/15,300.
(Additional reporting by Ewa Manthey, editing by Mark Shaw)