Focus on the London Metals Exchange continued to rest with zinc and lead rather than the much bigger copper contract due to these metals' bullish fundamentals, traders and analysts said Thursday.
LME three-month zinc held on to this week's record gains to skim close to Wednesday's all-time high of $4,145 a metric ton to trade at $4,140/ton during pre-market trade as commodity trade advisory funds drove prices higher.
Traders pointed to rapidly falling LME inventories, with zinc stocks falling to the lowest level since 1991.
LME data showed another zinc stock decline of 1,750 tons to 113,900 tons Thursday.
And while speculators are responsible for some of zinc's gains, much of the move is firmly rooted in the metal's tight fundamentals, they said.
Physical premiums have risen to record levels, making shipment of zinc metal from as far as the U.S. and even China viable, traders said.
LME lead rose on a par with Wednesday's record high of $1,585/ton in early trade, but profit taking pared gains.
Copper on the other hand languished at little changed levels, lagging the rest of the complex.
LME copper stocks have gone up by 12.8% on the week to rise to 126,725 tons. Some of the stock went into U.S. warehouses, solidifying the view that weakening data from the U.S. housing sector would dent demand.
Thursday's narrow $7,430-$7,560/ton range for copper was indicative of lack of direction for the market at present, traders said.
While stocks movements bolstered zinc, a large rise in LME stocks by 1,086 tons to 6,834 tons triggered profit taking for nickel.
Nickel prices fell to a one-week low of $30,350/ton, down 4% after an uninspired performance Wednesday.
"While other metals rallied strongly, nickel looked weaker after its good run of late. It has broken trendline support, which also resulted in profit taking," a trader said.
3 months metal (prices in dollars a ton)
Bid – Ask, Change from Wednesday PM kerb
Copper 7440.00-7450.00 Dn 5.00
Lead 1558.00-1560.00 Dn 22.00
Zinc 4100.00-4105.00 Up 70.00
Aluminium 2765.00-2770.00 Up 1.00
Nickel 30360.00-30400.00 Dn 1250.00
Tin 10150.00-10175.00 Dn 25.00
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