Mon, 26 March 07 – Copper extended last week's gains amid yet another decline in London Metal Exchange inventories and as market participants remained upbeat on the metal's near-term prospects, while tin rose to a record high on supply concerns.
At 1.18 pm, LME copper for 3 month delivery was up at 6,812 usd a tonne against 6,720 usd at the close Friday.
'We remain friendly to the copper market short term and note that while uptrends in other metals ... are looking vulnerable, the correction in copper on Friday was off a three month high and is likely indicative of a market pausing rather than turning lower,' said JP Morgan analyst Michael Jansen.
Copper closed flat on Friday although the metal posted gains of nearly 2 pct on the week, underpinned by declining LME stocks and data out from China showing copper imports in February nearly doubled from a year ago.
Jansen noted the past two weeks have seen the LME's available or on-warrant copper stocks declined for four out of five trading sessions, leaving available stocks at under 170,000 tonnes, or less than one week's consumption.
The trend for falling stocks has continued today, underpinning copper. The LME said in a daily report copper stocks in its warehouses declined by 2,100 tonnes to 181,550 tonnes, leaving only 167,550 tonnes available to the market.
Numis said strong Chinese imports, firm global GDP growth, a recovery in US housing starts and a more neutral Fed monetary policy have led it to raise its 2007 forecasts for copper, as well as for aluminium and nickel.
Deutsche Bank also raised its 2007 forecasts for copper and nickel prices on rapidly accelerating Chinese growth, limited stocks and supply constraints.
The bank now expects copper to average 6,290 usd this year, up 6 pct from an earlier forecast. It also sees nickel averaging 38,767 usd per tonne in 2007, up 23 pct from its last forecast in early January.
Tin hit a new all time high of 14,450 usd a tonne on continued supply concerns from Indonesia, where a government crackdown on illegal mining is still hitting production levels.
Indonesian officials have reportedly indicated that private tin smelters look unlikely to receive export permits in the near future after being ordered to obtain new mining permits.
Indonesia is the world's second biggest tin producer.
Zinc also moved higher, trading at 3,255 usd against 3,155 usd after a large increase in the number of cancelled warrants, which represent metal booked and due to leave LME warehouses.
'With everyone talking zinc down over the past few weeks, it seems the... warrant cancellation has caught a few players off guard,' said RBC Capital in a note.
'If it turns out that European galvanizers are again short of zinc and are being forced to turn to the LME to source material, we could be in for a pretty serious reversal in zinc prices,' it added.
The new July zinc futures contract debuted on the Shanghai markets today, with the metal gaining on its first day of trade to close at 29,220 yuan a tonne.
Nickel was up at 42,800 usd a tonne against 42,200 usd, recovering from a near 11.5 pct decline last week that erased the previous week's rally to an all-time high of 48,500 usd a tonne.
'While stocks generally remain at tight levels (circa 1 day of consumption), the fact that stocks have been trending higher throughout the March month has undermined one of the key reasons to believe that the market has the potential to keep on rising,' said Jansen.
On Friday, Jinchuan Group Co, which controls 90 pct of China's nickel output, denied reports it has a large bet on lower nickel prices and that it has delivered up to 1,000 tonnes of metal to LME warehouses to cover its bet.
The reports came after the company warned earlier last week that long-term damage is being done to the nickel market by the high price.
Aluminium was down at 2,747 usd a tonne against 2,763 usd amid yet another build in LME inv
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