Base metals get a polish from trade event

Base metals moved higher Wednesday, bolstered by positive sentiment emanating from London Metal Exchange week, the main annual event for the industry. Mining executives and base metals traders are, in general, more confident than a few weeks ago, based on the belief that strong Chinese economic growth will offset weakness in developed countries. Wednesday's upward price movement was, however, amplified by low trading volumes as traders recovered from Tuesday's parties. Kevin Norrish, of Barclays Capital, said there was a growing consensus that many of the trends that have supported the big price gains in metals of the past few years are unlikely to fade away. "Future demand growth rates are likely to be higher, mining conditions more difficult and costs much higher," he said. Lead hit a fresh high on strong demand from battery manufactures, tight supplies after the closing of a mine in Australia and extremely low global inventories. Lead stocks at LME's warehouses are equivalent to just half a day of global demand. Lead surged to $3,885 a tonne but later slipped to trade 0.2 per cent lower at $3,825 a tonne. Copper, the base metals' bellwether, consolidated above the psychologically important $8,000-a-tonne level on fresh buying and upbeat comments from Codelco, the world's largest copper producer. The red metal hit an intraday high of $8,225 a tonne and later traded 2.6 per cent higher at $8,175 a tonne. Aluminium moved 1.8 per cent higher to $2,470 a tonne. Zinc was 2.4 per cent higher at $3,064 a tonne, while nickel rose 1.9 per cent to $31,500 a tonne. Tin moved 0.6 per cent higher to $15,950 a tonne. Gold was higher on renewed US dollar weakness and news that the Bundesbank, the German central bank, will refrain from large gold sales in the next 12 months. The Bundesbank on Wednesday said that it planned to sell a maximum of 8m tonnes of gold coins, a fraction of the almost 3,500 tonnes of gold it holds. Spot gold in London hit an intraday high of $745.85 a troy ounce, just below the 28-year high of $747.65 an ounce it hit in early October. It later traded at $739.40-$740.20 an ounce, up from the previous last quote of $737.60 an ounce. Spot silver rose to $13.60 an ounce, up 14 cents on the day. Crude oil prices were little changed at just above $80 a barrel after surging more than $1 on Tuesday. Nymex December West Texas Intermediate moved 6 cents higher to $80.32 a barrel, while ICE December Brent declined 4 cents to $77.46 a barrel. The spread between the WTI's front-month and second-month futures contract - a key measure for the profitability of the commodities indices - widened to 75 cents. Agricultural commodities were mixed, with wheat extending its correction from its recent all-time high of $9.61¾ a bushel. CBOT December wheat fell 1½ cents to $8.44 a bushel, its lowest price since mid-September. However, futures contracts for the next crop season moved higher. CBOT July 2008 wheat rose 1¼ cents to $6.61 a bushel. CBOT December corn rose 2¾ cents to $3.45¼ a bushel, with next season futures contracts trading above the front-month contract. CBOT December soyabean rose 6¾ cents to $9.57 a bushel.