Nickel sets new record while copper remains firm

Supply disruptions and continuingly high demand has meant rising nickel prices, while the copper price stays firm.

LONDON (Reuters)  - 

Copper firmed close to its seven-month high, nickel hit a new record and zinc hit a three-month high on Tuesday on concerns about supply disruptions and persistently strong demand, analysts said.

The plan by Peruvian miners to launch a strike on April 30 to demand the country's president to improve pension benefits and eliminate outsourcing supported prices.

"There is potential for further upside if the Peru nationwide strike by miners comes to fruition," analyst David Thurtell at BNP Paribas said.

Copper for three-months delivery on the London Metal Exchange touched $8,095 a tonne earlier in the session, a tad lower from its seven-month high of $8,100, it hit last week.

The metal fell back to $8,070 in the official session, up $60 from Monday's close.

"We had a good close with copper and zinc last night and today prices gained momentum. Mostly we see fund buying and a little bit of short covering," an LME trader on the floor said.

"But the market is very jittery at the moment, with the prices so high any news coming to the market is moving the prices drastically...But copper is eyeing $8,250 today."

LME nickel hit a new high of $50,200 before easign back to 49,950/50,000 during the session.

"With nickel the trend is upwards because of lack of supply," the LME trader said.

"In the base metal sector, we are most bullish on nickel as we believe that the commodity reflects one of the tightest markets," JP Morgan said in a report.

Stocks of available nickel in LME registered warehouses currently stand at 2,958 tonnes -- less than one day of global consumption.

"We have therefore increased our position, finding relatively cheap companies with long term growth prospects. We remain slightly underweight in copper and zinc as we expect inventory to rise in the short term," JP Morgan added.

ALL EYES ON PERU

A widespread strike in Peru could create significant shortages of metal concentrates for Chinese and Japanese smelters and could cause panic buying of metals, analyst John Meyer at Numis Securities said in a report.

He said Peru represents some 7.1 percent of global copper mine production annually, citing Bloomsbury Mineral Economics.

Peru is also a major zinc supplier and three-month zinc hit $3,830 earlier, the highest since January 15, and traded at $3,822 a tonne against Monday's $3,730.

"Zinc looks poised for stronger performance as there is evidence of slowing Chinese exports," Barclays Capital said in a report. Zinc stocks fell by 475 tonnes to 98,700, down by 7 percent in April.

The bank had revised its average cash price for copper, zinc and lead upwards. For zinc Barclays forecast an average of $3,800 a tonne for the second quarter and $3,490 for 2007.

On the other hand sentiment was capped after protests at an Indonesian mine and a force majeure in Argentina had ended.

The protests at Freeport-McMoRan's giant copper mine Grasberg lifted copper to this year's high of $8,100 last week.

The market also saw the force majeure at Xstrata's Bajo de Alumbrera mine in Argentina lifted.

STRONG DEMAND

Dwindling copper stockpiles, expectations of strong demand from China and a market wary of supply disruptions underpinned prices, which have risen by 28 percent this year.

Copper stocks in LME-warehouses fell by 2,025 tonnes to 166,125, just over three-days of global consumption, and stocks have dropped by some 25 percent since the start of February.

In March, China's refined copper imports hit the highest level ever, with total imports over 200,000 tonnes.

"The fundamental story is still China, that is still the powerhouse and that is one of the reasons why the market continued to go up," a European trader said.

In industry news, BHP Billiton Ltd./Plc said it pushed for record output levels for many of its minerals this year, after reporting a surge in output in the third quarter to meet rising global demand.

Aluminium was at $2,873 versus Monday's $2,865.

Lead has gained some 18 percent during 2007 and was $55 higher from $1,965, close to its all-time high of $2,045. Tin was at $14,050 against $13,800 at the close on Monday.

SUBSCRIBE to Mineweb.com's free daily newsletter now.

Print story      Email story      Subscribe to free newsletter
Related Links OTHER PAGES:  BASE METALS AFRICA

Back