London Metal Exchange (LME) copper ended lower on Monday as profit-taking started off the second half of 2006, dealers said. "I believe copper prices will go down to $6,600 or $6,700 in the short term as people are less interested to invest at this time of the year," an LME trader said, pointing to the holiday season.
"However, I think at the end of the August, when people return from their holidays, prices will go up to the recent record high of $8,800 per tonne or even above $9,000," he added.
Three months copper closed the kerb at $7,275 against $7,320 on Friday.
Window-dressing had lifted prices in New York to a three-week high on Friday as investors wanted to close the first half of 2006 on favourable terms. Last week copper rose by as much as 12 percent.
Dealers said volumes were thin given the US Independence Day holiday on Monday and Tuesday.
From Wednesday they expected more money coming into the markets as fund managers typically allocated new tranches of cash in the first few days of the month.
Nickel closed up $650 at $21,800, supported by falling inventories. LME stocks hit their lowest since September 2005 at 9,990 tonnes, a decline of 73 percent from an earlier peak this year of 37,000 tonnes.
Taking into account metal on cancelled warrant, the level of current LME stocks was even lower at less than 7,000 tonnes and equivalent to the low point of the current cycle a year ago, analyst John Reade at UBS said in a daily note.
Stainless steel inventories were at low levels globally and the stainless scrap market was very tight, the report added.
"All this suggests that the nickel market is set to remain very strong for the remainder of the year, with consumption outpacing production and nickel inventories remaining low."
By contrast, LME inventories of aluminium rose by 12,950 tonnes to 773,850 on Monday.
Aluminium closed at $2,605, down $25.
A Standard Bank monthly report highlighted that aluminium faced no shortage of supply and that the only source of significant upward momentum for prices looked to be any strength that spilled over from the other metals.
Tin ended at $8,200, up from Friday's $8,100/8,150, while lead closed at $1,000, down from $1,015.
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