Trade on the London Metal Exchange was mostly lackluster Monday, except for another record high for nickel, where tight inventories and a firm outlook for the stainless steel sector boosted prices, traders said.
LME three-month nickel rose to a new all-time high of $32,700 a metric ton, up 2% on the Monday PM kerb.
LME stocks rose by 312 tons to 5,148 tons, but that level represents still only one day of global consumption.
Demand from the stainless steel sector will likely remain strong during the fourth quarter, with stainless producer Outokumpu OYJ reporting a firm backlog of orders stretching to February.
Financial activity from funds have helped push LME nickel prices roughly 30% above fair market value, JP Morgan said.
With nickel prices at such highs, industry players may lower the amount of nickel used in stainless steel rather than find a substitute, JP Morgan said.
A general strike on the French controlled island of New Caledonia, the location of Eramet SA's Doniambo nickel smelter, paired with low inventories, prevents "anyone from selling this market short," a trader said.
LME copper continued to underperform the base metal sector, falling to a one-day low of $7,480/ton after oil and gold prices retreated in the afternoon.
Given that fundamentals for copper appeared to be easing, the metal would likely look to oil and gold prices for direction, the trader said, in reference to recent World Bureau of Metal Statistics data that indicated a 88,000-ton surplus during January-August 2006, while other base metals remained in deficit.
Copper also retreated on reports of union leaders from the Codelco Norte division are starting meetings to draw up a new contract agreement, a trader said.
Following lower copper prices, LME aluminium was unable to hold on to the key $2,700/ton fell to $2,685 but closed above the trendline.
Copper's lack of performance in recent days has sown some doubts over the longevity of the current bull run.
"Funds need performance and with the market going sideways, they'll hesitate to allocate more money," a trader said.
LME zinc traded close to last week's record high of $4,020/ton after LME stocks fell by 2,500 to 119,900 tons, traders said.
"At this rate the trade is wondering when and if zinc stocks will fall to zero," a trader said.
Very low zinc availability in the physical market is fueling stock drawdowns, with European merchants increasingly turning to supplies from LME warehouses in New Orleans, where 75% of stocks are located.
3 months metal (prices in dollars a ton)
Bid – Ask, Change from Friday PM kerb
Copper 7540.00-7545.00 Dn 20.00
Lead 1510.00-1512.00 Up 11.00
Zinc 3920.00-3930.00 Dn 45.00
Aluminium 2708.00-2710.00 Dn 8.00
Nickel 32350.00-32400.00 Up 300.00
Tin 10375.00-10400.00 Up 230.00
豫公网安备41010502003434号