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Late liquidation prompts 4.3% fall in copper: LME Industrial trend  7/25/2006

London Metal Exchange three-month copper fell sharply in the approach to late kerb Friday as light trading conditions gave way to speculative selling, triggering light sell stops, market participants said.

Copper fell as far as $7,030 a metric ton, down $320 or 4.3%, on the previous kerb in the last half hour before late kerb in London, rebounding slightly at kerb close to $7,035/ton.

Liquidation in copper was linked with hedge fund selling across the commodities complex and occured alongside a fall in both spot gold and oil prices, traders said.

Traders also said many investors remain nervous about developments at Chile 's Escondida copper mine where any fresh news on labor contract negotiations currently underway has the potential to swing prices $500/ton either way.

Copper now looks vulnerable to retreat to $7,000/ton after failing to hold $8,000/ton this week, Triland Metals said.

Aluminium fell $40 from the previous PM kerb to $2,460/ton. Stocks of aluminium in LME warehouses fell by 3,350 tons Friday, with rising canceled warrants indicating sizeable withdrawals of warehouse stocks in coming weeks.

Nickel prices resisted selling pressure seen elsewhere in the complex, falling only $45 from the previous kerb to $23,550/ton.

Zinc veered close to a test of the 100-day moving average at $3,057/ton closing just ahead of that at $3,070/ton at late kerb, down $100 on the session. A break of the 100-day trend line would signal a retreat to the June low of $2,800/ton, representing a hedge buying opportunity, according to Triland Metals Ltd.
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