London 04/10/2016 - Base metals ended Tuesday LME trading in negative territory, with a stronger dollar weighing, traders said.
Volumes were thin - Chinese markets will be closed until next Monday for a national holiday.
"The absence of the Chinese is weighing heavily on the markets and, combining that and dollar strength, all the metals retreated from their recent highs," Kingdom Futures director Malcolm Freeman said. "It is probable that the markets will simply drift further this week as longs let positions go and buyers wait for better buying opportunities."
The dollar index climbed to a high of 96.44 today, its strongest since August 9, supported by forecast-beating US data yesterday. The US final manufacturing PMI for September came in at 51.5, close to the expected 51.4, and the ISM manufacturing PMI for September at 51.5 beat the expected 50.4.
But ISM manufacturing prices for September and construction spending for August both undershot at -0.7 percent and 53 respectively.
This morning, the EU PPI at -0.2 percent missed the expected 0.0 percent.
A swathe of US and European data is scheduled for release tomorrow, including final services PMIs from six separate countries.
In the metals, copper concluded at $4,805 per tonne, down $14 on Monday's close. It dipped below the $4,800 level earlier today. More than 10,000 lots changed hands on Select by the kerb close.
"Thinner liquidity usually means jumpier price action. The volumes on Select are not up to much but the price moves have been notable. It will be interesting to see how the Chinese react upon their return," a trader said.
The metal shrugged off the news that 1,000 miners have gone on strike at Freeport's Grasberg mine in Indonesia after the company said that production would not be affected.
Stocks and cancelled warrants were both a net 3,250 tonnes lower at 368,525 tonnes and 75,925 tonnes respectively.
Aluminium ended $9 lower at $1,669 after 6,550-tonne falls in stocks and cancelled warrants to 2,148,275 tonnes and 865,025 tonnes respectively. A small pocket of tightness remains in the cash/Oct date, which was last at a backwardation of $1.75.
Nickel fell to its lowest in around two weeks today - it closed $270 lower at $10,080. Stocks and cancelled warrants were both 570 tonnes lower.
Fears of supply issues following mine closures in Philippines are fading while there is talk that Indonesia could resume nickel ore exports.
Zinc concluded at $2,380, down $26. Stocks jumped 8,875 tonnes to 447,500 tonnes due to arrivals in New Orleans. Cancelled warrants were 975 tonnes lower at 32,275 tonnes. Despite the stock increase, the Cash/Oct date remains backwardated at $4.
Consumers are putting off purchases on expectations that the price increase is unsustainable, traders said.
Lead at $2,075 was $22 lower - availability in LME-bonded warehouses soared to its highest since September 2015 when 19,200 tonnes were put back onto warrant, lifting on-warrant material to 144,250 tonnes. Total stocks edged 150 tonnes higher to 190,400 tonnes.
Tin slipped $50 to conclude at $19,875, with stocks rising 60 tonnes to 3,570 tonnes. Inventories have ticked higher this week, reversing the trend of declines that pushed tin availability to multi-year lows. Spreads remain tight - the benchmark cash/threes was last at a backwardation of $90.
Steel was last indicated at $300/325 and cobalt and molybdenum at $27,500/28,000 and $15,000/15,500 respectively. Cobalt cancelled warrants fell six tonnes to 95 tonnes.
(Additional reporting by Kathleen Retourne, editing by Mark Shaw)