London Metal Exchange three-month copper was lower Tuesday with ongoing supply threats protecting the market from any sustained downside, market participants said.

Though some market participants believe the possibility of strike action at Chile's Escondida mine has been priced in, they say it's enough to prevent investors from becoming overly bearish and shorting the market.

Union leaders and management at Chile's Escondida copper mine are currently negotiating on new labor contracts which expire Wednesday.

"Copper market participants will be closely monitoring the situation at Escondida as a strike at the world's largest copper mine could serve to spiral prices to record highs," said Barclays Capital analysts.

Supply-side factors in aluminium, including a large drawdown of LME warehouse stocks as well as a 8,400-ton rise in canceled warrants, helped keep prices relatively firm. Prices fell $33 on the previous PM level to $2,533/ton. A labor contract dispute at Century Aluminium Co. has led to some 580 workers threatening to strike at midnight Tuesday.

Zinc closed at $3,404/ton at the late kerb in London, down $11 on the previous PM kerb levels.

Nickel prices jumped to a fresh record kerb closing price of $25,825/ton, up $330 on the previous PM kerb levels. Prices continue to be supported by the recent pattern of falling stocks and growing canceled warrants.

3 months metal (prices in dollars a ton)
Bid – Ask, Change from Monday PM kerb

Copper 7765.00-7770.00, Dn 184.00
Lead 1110.00-1115.00, Dn 18.00
Zinc 3404.00-3405.00, Dn 11.00
Aluminium 2533.00-2535.00, Dn 33.00
Nickel 25825.00-25850.00, Up 330.00
Tin 8350.00-8400.00, Dn 50.00