Base metals close up in London; Nickel highs driven by speculators

Speculators drove nickel prices on the London Metal Exchange to a record high Thursday, taking advantage of very light volumes due to the Thanksgiving holiday in the U.S., analysts said.

LME three-month nickel rallied to an all-time high of $32,800 a metric ton, up 5.3% on the Wednesday PM kerb.

Participants sought to drive prices up while volume was light, Michael Skinner of Standard Bank said.

Tight supply fundamentals also continue to underpin nickel prices, Barclays said in a report.

"The tight situation of LME stocks continues to underpin prices, while LME nickel stocks rose by 150 tons Thursday, they continue to be at critically low levels, totaling 6,500 tons of which 1,600 tons are canceled warrants," Barclays said in a note.

Barclays noted Wednesday that South Korean-based POSCO announced the startup of a $720 million stainless steel mill in China. The mill has stainless steel melting capacity of 600,000 tons and could consume over 30,000 tons of nickel annually.

Other LME traded metals also firmed. LME copper rose to an intra-day high of $6,995/ton after buying taking advantage of Wednesday's pullback before the kerb, traders said.

Next week, when U.S. traders return to their desks, will offer more clues on copper's near-term direction.

"I think the rise Wednesday and firmer prices today (Thursday) are a short-term upside correction in a falling market," a trader said.

"Even if prices rally up to $7,200/ton that would still be within an overall declining price trend," he said.

LME zinc posted gains on the back of technical tightness pushing out spreads, with the cash-to-three-month backwardation moving out to a five-month high of $85/ton.

European physical zinc premiums have risen sharply over the past two months as LME stocks move to critically low territory, UBS said, reflecting strong spot demand for the metal and is helping to underpin exchange-traded prices.

European physical premiums are quoted in the range $320-$360/ton compared with $290-$330/ton in mid-September and $120/ton at the start of the year.

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

Copper 6980.00-6990.00 Up 85.00
Lead 1549.00-1550.00 Up 17.00
Zinc 4450.00-4455.00 Up 100.00
Aluminium 2687.00-2688.00 Up 14.00
Nickel 32400.00-32450.00 Up 1250.00
Tin 9990.00-10000.00 Up 65.00