Base Metals Mixed; Copper Slips 0.6%

NEW YORK (TheStreet) -- Base metals were mixed Tuesday with the dollar index relatively flat.

Positive economic data from the U.S. and eurozone could push base metals higher, but tight supply conditions for metals like copper will cushion the price rise.

November advance retail sales from the U.S. are seen increasing by 0.6% as compared to 1.2% in October. The Producer Price Index for November is estimated at 0.6%, higher than October's 0.4%. October business inventories are forecast at 1%, marginally above the 0.9% recorded in September.

Goldman Sachs forecasts that metal prices are likely to diverge following their respective fundamentals as emerging-market economies run ahead and demand recovers in the developed nations, Reuters reports. It further added that metals with tight cyclical fundamentals like copper and zinc may outperform aluminum, which has readily available capacity, and nickel. Copper may hit fresh highs above $11,000, the forecast says.

Copper

After touching all-time highs Monday, copper for three-month delivery fell 0.6% to $9,167 per metric tonne on the London Metal Exchange as investors locked in profits. Meanwhile, copper spot prices are trading at a premium of $70 per tonne, the highest in two years, pointing toward tight supply conditions with an upward trend for prices.

Retreating from its 52-week lows, copper inventories added 1,825 tonnes to close at 350,450 tonnes. The metal faces support at $9,090 and resistance at $9,319.

Southern Copper ( SCCO) closed at $47.32 Monday, finding support at $46.68 and resistance at $47.93. Freeport-McMoRan Copper & Gold ( FCX) closed at $115.53, with support and resistance at $114.15 and $117.15, respectively. Teck Resources ( TCK) closed at $57.27, with support at $56.82 and resistance at $58.10.

Aluminum

Aluminum for three-month delivery edged up 0.2% to $2,335 per tonne. Inventories narrowed 1,650 tonnes to close at 4.27 million tonnes. The metal faces support and resistance at $2,324 and $2,357, respectively.

Alcoa ( AA) closed at $14.36 Monday, finding support and resistance at $14.26 and $14.48, respectively. Century Aluminum ( CENX) closed at $15.92, with support at $15.75 and resistance at $16.25. Kaiser Aluminum ( KALU) closed at $50.98, finding support at $50.63 and resistance at $51.67.

Nickel

Nickel for three-month delivery gained 0.2% to close at $24,590 per tonne. Inventories declined 120 tonnes to close at 131,064 tonnes. Nickel finds support at $24,223 and resistance at $24,938.

Stillwater Mining ( SWC) revealed that its major shareholder Norilsk Nickel sold its entire stake in the company -- 37 million shares - for $19.50 apiece with the remaining 9 million shares to UBS ( UBS), Bloomberg reports. Norilsk said it is seeking to rationalize its international business operations and focus on core operations.

Zinc

Zinc for three-month delivery rose 1% to $2,345 per tonne. Inventories surged by 25,650 tonnes to close at 52-week highs of 656,375 tonnes. The metal faces support and resistance at $2,291 and $2,360, respectively.

Hudbay Minerals ( HBM) is seeking to produce almost 70,000 to 90,000 tonnes of zinc in 2011 with a total capital expenditure of $289 million. Additionally, it plans to produce 40,000 to 55,000 tonnes of copper. Moreover, an additional budget of $105 million is allocated for sustaining the capital.

Lead

Lead for three-month delivery remained relatively flat at $2,440 per tonne during early trading Tuesday. Inventories decreased 1,200 tonnes to close at 203,175 tonnes. Support and resistance levels for lead are at $2,413 and $2,464, respectively.

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

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