May 10, 2018 / 12:35 PM / 9 months ago

METALS-Aluminium weighed down by options activity, copper gains

* LME/ShFE arb:

* GRAPHIC-2018 asset returns: (Updates with closing prices)

By Eric Onstad

LONDON, May 10 (Reuters) - Aluminium fell on Thursday after three sessions of gains, pressured by trade selling and bearish options activity, while copper gained on lower inventories and speculative buying.

Benchmark aluminium on the London Metal Exchange closed down 1.4 percent at $2,335 a tonne.

“Aluminium is finding very strong resistance just below $2,400. The reason is in the option market, which is mostly bearish on the June delivery,” said Gianclaudio Torlizzi, partner at consultancy T-Commodity in Milan.

“There’s risk of more downside and I think the market will try to break the $2,170 support,” he added.

Aluminium had gained about $200 at this week’s highs since touching a low of $2,175 on April 24.

Also weighing on aluminium was trade selling, Alastair Munro of broker Marex Spectron said in a note.

* CHINESE DATA: Supporting metals prices was data showing China’s producer inflation picked up for the first time in seven months in April, suggesting its industrial demand remains resilient even as trade tensions ratchet up with the United States.

* COPPER: Three-month LME copper on the London Metal Exchange climbed 1.6 percent to finish at $6,917 a tonne, building on its 1 percent gain in the previous session.

Copper was potentially forming a bullish inverse head and shoulders pattern on the charts, Torlizzi said. “I will be a big buyer of copper if it breaks above $6,930, the right shoulder of the pattern.”

* COPPER PREMIUMS: The Yangshan copper premium SMM-CUYP-CN was holding strong at $81.50 a tonne, up from $79 last week and $71.50 in January, according to Shanghai Metals Market.

* INVENTORIES: On-warrant copper stocks MCUSTX-TOTAL in LME-registered warehouses - metal not earmarked for delivery - fell another 9,575 tonnes to 230,575, their lowest since late January and down 29 percent in the last three weeks.

* ZINC: LME zinc rose 0.4 percent to end at $3,087 a tonne, but Simona Gambarini, commodities economist at Capital Economics, expects prices to lose ground partly due to rising supply.

“We expect a sharp increase in mine supply this year – we have pencilled in a 6 percent rise,” she said in a note. “Indeed, there are signs that metal availability, at both concentrate and refined level, is improving.”

* NICKEL: Nickel shed 0.3 percent to $13,880 a tonne.

“Formation of monthly shooting star denotes sudden reduction in bullish momentum,” Stéphanie Aymes, head of technical analysis at Societe Generale, said in a note. “Graphical lows of $13,000 will be a pivotal support.”

* PRICES: Lead added 0.5 percent to close at $2,305 a tonne and tin dropped 1.4 percent to $20,825.

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Additional reporting by Tom Daly in Beijing; Editing by Jon Boyle and Mark Potter

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