Zinc prices declined on Thursday on rising inventories, while aluminium was volatile on speculation about whether U.S. sanctions on Russian producer Rusal would be lifted.
Zinc stocks in warehouses certified by the London Metal Exchange MZNSTX-TOTAL have jumped 26 percent this week, rising by a further 18,675 tonnes on Thursday.
The amount of cancelled inventory - stock earmarked for delivery - was very low at 5.4 percent, LME data showed.
“The real interesting data point is not just the arrivals but (the) cancelled stock,” said Oliver Nugent, commodities strategist at ING in Amsterdam.
“You had deeply held trader stocks and those stocks have now been unwound, so that makes metal more available and the tightness is coming off the boil.”
In February, zinc touched its highest in more than a decade at $3,595.50 a tonne on supply concerns after closures and suspensions of big mines in recent years, but many operations have resumed production.
Benchmark LME zinc was down 0.5 percent at $3,119 by 1400 GMT, having dropped 2.4 percent on Wednesday.
* DOLLAR: Some base metals pared losses while others gained after the dollar weakened. That occurred after European Central Bank President Mario Draghi presented a relatively confident outlook for the euro zone economy, boosting the euro. A weaker dollar makes metals cheaper for holders of other currencies.
* LME ALUMINIUM: Three-month LME aluminium gained 1.1 percent to $2,270 in volatile trade. It fell earlier to $2,195 as investors continued to liquidate, but later jumped more than 3 percent to a high of $2,316.
Traders attributed the afternoon surge to speculation that Russian billionaire and Rusal shareholder Oleg Deripaska did not plan to divest his holding and that U.S. sanctions would remain in place on one of the world’s biggest aluminium producers.
Reuters quoted a Russian Finance Ministry source on Wednesday as saying Deripaska wanted to keep his assets.
The metal is down about 18 percent from the $2,718 seven-year high hit on April 19 after the original sanctions announcement raised concern over potential aluminium shortages.
* LONG POSITION: The speculative long position in LME aluminium was estimated to have retreated to 21 percent of open interest by Tuesday’s close, from 26 percent a day earlier, Alastair Munro at broker Marex Spectron said in a note.
* ALUMINIUM PREMIUM: The U.S aluminium premium on Comex was at 21.4 cents per pound ($472 a tonne) on Wednesday, down from a three-year high of 22.1 cents hit on April 11.
* PRICES: LME copper fell 0.4 percent to $6,978 a tonne, lead added 0.7 percent to $2,321.50, nickel dropped 0.6 percent to $14,060 and tin firmed by 0.4 percent to $21,330. - Reuters -