After an off day on Monday, with the LME closed for holiday, the base metals were mixed on Tuesday. Copper pushed as high as $2.15 early in the pre-dawn hours, but that was it as it sank pretty much straight through the day from there, just coming off its intraday lows to finish at $2.0468/lb., down nearly 4 cents from Friday.

Nickel peaked above $5.50 before it too declined, but it managed to eke out a gain late, closing at $5.3206/lb., up just over a penny. Zinc traded mostly sideways, ending at $0.6744/lb., up less than a half-cent. Aluminum also wound up at $0.6744/lb., down less than a quarter-cent, while lead posted a modest gain to $0.6362/lb., up just under a penny.

Copper backed off its gains, falling from a 2-week high as declining equities and a strengthening dollar were the main drivers of the day, along with perhaps a bit of profit taking after several days of higher prices. The metal had moved up12% in the previous four sessions on speculation that manufacturing will rebound.

As one trader commented, “We’ve moved up for the last couple of days and I’d say it’s probably profit taking. But I don’t think the selling was based on anything too noteworthy.”

Volume was light, and with London closed on Monday, some traders see a market mood where holiday mode persists for a few more days.

In any event, the supply situation continues to be supportive. Copper inventories monitored by the LME dropped again yesterday, falling by 3,775 metric tons, to 394,925 tons.

But, “Prices have reached a top,” wrote Eliane Tanner, an analyst at Credit Suisse Group (NYSE:CS) in Zurich. She predicted a drop “in the weeks ahead.”

Citigroup analysts agreed, writing that, “Copper has run way ahead of its fundamentals.”

In company news, Xstrata (LON:XTA) reported that copper output in the first quarter of 2009 fell 1.3% percent from the same period a year earlier, to 217,092 metric tons, while production of coal, nickel, platinum and zinc in concentrate all rose.

Source: Traders Await Inventory Figures