Base Metals Could Reverse Gains

NEW YORK (TheStreet) -- Opening marginally lower during the early trading hours Tuesday, base metals are likely to continue trading down as gloom over the economic recovery returns ahead of new economic data.

The data Tuesday may signal sluggish industrial activity, partially balanced by a marginal improvement in consumer confidence. Base metals could attract bargain-hunting and a corrective intraday bounce back is likely.

On Monday, the London Metal Exchange was closed for a holiday, but base metals ended on a higher note on the COMEX taking positive cues from Asian equities.

Copper

Copper for three-month delivery dipped 0.8% to $7,398 per tonne on the London Metal Exchange Tuesday as lower-than-forecasted personal income data in the U.S. on Monday raised fears of a faltering economic recovery. LME copper inventories shed 1,150 tonnes to 400,100 tonnes Friday. The metal faces support and resistance at $7,305 and $7,529, respectively.

Brazilian mining giant Vale(VALE) and a diversified mining group African Rainbow Minerals have announced a copper mine joint venture in Zambia with a capital expenditure of $380 million and an additional $500 million in the longer-term.

Southern Copper(SCCO), which closed at $29.91 in the previous trading session, has support at $29.68 and resistance at $30.27. Freeport-McMoRan Copper & Gold(FCX) closed at $70.36 with support and resistance at $69.83 and $71.42, respectively. Teck Resources(TCK) closed at $33.14 with support at $32.76 and resistance at $33.85.

Aluminum

Aluminum for three-month delivery declined 0.6% to $2,046 per tonne on Tuesday. LME aluminum stockpiles narrowed 3,200 tonnes to close at 4.44 million tonnes Friday. The metal finds support at $2,022 and faces resistance at 2,077.

United Company Rusal reported second-quarter net income of $1.02 billion, or 7 cents a share, reversing a year-earlier loss. The turnaround came largely on the faster jump in prices than costs and the increase in value of Rusal's stake in Norilsk Nickel. Sales during the quarter surged 51% to $3 billion. Looking ahead, the company said that it plans to expand aluminum production by 3% for 2010 and alumina output by 11%.

Alcoa(AA) closed trading at $10.25 on Monday finding support and resistance at $10.17 and $10.39, respectively. Century Aluminum(CENX) closed at $9.81, with support at $9.67 and resistance at $9.95. Kaiser Aluminum(KALU) closed at $36.70, finding support at $36.28 and resistance at $37.46.

Nickel

Nickel for three-month delivery shed 1.4% to $20,760 per tonne on the LME. On Friday, LME nickel inventories declined marginally to 118,860 tonnes from 118,956 tonnes the previous day. The metal finds support and resistance at $20,530 and $21,345, respectively.