Nickel and lead hit new highs as metals shine
Chris Flood

Base metals enjoyed strong gains this week in spite of the absence of Asian buyers due to holidays, with copper surging through key resistance levels and nickel and lead reaching new records.

Strike action in Peru also bolstered sentiment this week, although support from miners for the action appeared lukewarm.

Traders hope Chinese buyers returning next week could generate further gains as they cover short positions since prices have moved up significantly in their absence.

Copper jumped 7.2 per cent to $8,300 a tonne this week, helped by London Metal Exchange stocks shrinking to a six-month low at 150,925 tonnes.

Nickel surged 10.6 per cent to $51,550 a tonne this week after hitting a record at $51,600 Friday, with available stocks still critically low at 3,354 tonnes. Further supply tightness seems likely after disruption at the Voisey Bay nickel mine in Canada.

Michael Widmer at Calyon says stainless steel producers will cut output this year but this will not have a significant impact on nickel demand. Calyon raised its 2007 average nickel price forecast from $34,580 to $44,080 and expects prices to average $50,000 in 2008.

Lead rose 4.3 per cent to $2,107.5 a tonne this week after hitting a record at $2,115 Friday. Ivernia, the Canadian company which supplies about 3 per cent of global lead production, has halted exports from Western Australia due to an investigation into lead poisoning. Peter Fertig at Dresdner Kleinwort said the market was also speculating that demand from China, the world’s largest consumer, would outpace rising inventories.

Zinc played catch-up, gaining 12.6 per cent to $4,140 a tonne. Robin Bhar of UBS says supply/demand fundamentals are tight and any moves to cover the large short positions in the market could push zinc beyond its record $4,600 a tonne.

Base metals strength inspired gains for gold, up 1.1 per cent to $688.50 a troy ounce this week.

Platinum rose 2.7 per cent to $1,321 a troy ounce amid rumours of an imminent US exchange traded fund launch. Prices were also lifted by ongoing industrial action at Northam Platinum in South Africa.

US motorists are likely to face record petrol prices this summer, according to Sam Bodman, US energy secretary. Nymex May/June RBOB gasoline eased 0.9 per cent to $2.2391 a gallon this week, but concerns are mounting that refineries will struggle to keep up with demand after a precipitous fall in petrol inventories over the past 12 weeks.

ICE June Brent slipped 10 cents to $65.95 a barrel Friday, down 3.6 per cent over the week, in choppy trading dominated by violence in Nigeria.

Nymex June West Texas Intermediate fell 52 cents to $62.67 a barrel, retreating 5.8 per cent this week.

Copyright The Financial Times Limited 2007