DJ BASE METALS: LME Copper In "Stalemate" As Market Eyes Libya

LONDON, Feb.24 (Dow Jones)--Copper closed in positive territory for the first time in over a week on the London Metal Exchange Thursday, as previously bearish trade players opted to wait on the sidelines until the situation in Libya clarifies.

LME three-month copper traded 0.8% higher at $9,501 a metric ton at the PM kerb close, as cautious trading eased downward pressure on the metal.

"Copper has reached a stalemate as the market waits to see what happens with exogenous factors in the Middle East and North Africa," said Standard Bank analyst Leon Westgate. While weaker longs have been taken out, position holders with more established longs are probably happy to ride out the current weakness, Westgate said.

Barring any significant developments in the MENA region, copper should remain in range in coming days, as fund managers avoid taking excessive risk while the geopolitical situation remains unclear, he said.

With market players' attention elsewhere, the base metal markets largely ignored a mixed bag of economic data releases from the U.S., analysts said.

While initial jobless claims dropped more than expected in the week ended Feb. 19, sales of new homes slumped 12.6% in January, compared to the 8.8% expected.

Aluminum also closed up on the day, trading at $2,540/ton, up 0.4% at the PM kerb close. While complex-wide risk aversion has taken its toll on aluminum prices in recent days, the metal's energy-intensive production methods and the location of several smelters in the Middle East makes it particularly sensitive to rising oil prices and shipping flows from the region, said analysts.

Once near-term profit taking has settled down, aluminum could "outperform the complex," said Deutsche Bank analyst Daniel Brebner.

Nickel put in the weakest performance of the day, closing down 4.1% at $27,505/ton. Though the metal has drawn support in recent days from signs of fundamental tightness--particularly in light of supply disruptions a Vale's Copper Cliff smelter in Sudbury, Ontario--the relatively small size of the nickel market makes it more volatile, and therefore vulnerable to correction, market players said.

"Nickel has done exceptionally well in recent days, but it buckled under the pressure of copper's losses this morning," Westgate said.

Prices in dollar a metric ton.

3 Months Metal             Bid-Ask        Change from
                                          Wednesday PM kerb
Copper                  9501.0-9503.0     Up 76
Lead                    2499.0-2500.0     Dn 39
Zinc                    2473.0-2475.0     Dn 21
Aluminum                2540.0-2541.0     Up 10
Nickel                27505.0-27510.0     Dn 1,175
Tin                   31645.0-31650.0     Up 145
Aluminum Alloy          2330.0-2340.0     Dn 20
Aluminum Alloy-NASAAC   2560.0-2570.0     Up 50