Tuesday May 27, 01:47 PM
Metals - Copper firm but nickel slides over $1,000/tonne amid demand fears
LONDON (Thomson Financial) - Copper rose as investors hunted bargains after last week's losses, amid expectations supply of the metal will remain tight this year, though nickel nosedived, sliding by over $1,000 a tonne at its lowest point.
A dip in copper inventories monitored by the London Metal Exchange lent some support to the red metal. LME copper stocks fell 975 tonnes this morning to 124,400 tonnes, the exchange said.
At 1:26 p.m., LME copper for three-month delivery was trading at $8,220 per tonne against $8,180 per tonne at the close Friday.
'After the weakness seen last week, the metals are well positioned to see some bargain hunting, but much will depend on how confident the market is,' said BaseMetals.com analyst William Adams.
LME-traded metals suffered last week from a bout of long liquidation, although short-covering ahead of the long weekend, helped by a weaker dollar, provided some support on Friday.
The market's upward bounce has been sustained this morning, analysts said, as investors take advantage of lower prices to buy into the metals. Traders are awaiting direction from key economic data due out later today, including U.S. housing and consumer confidence figures.
Meanwhile, nickel bucked the upward trend seen in the other metals, sliding over $1,000 a tonne to an intraday low of $22,900 a tonne in early afternoon trade, as investors betted on easing demand and rising supply.
Later nickel for three-month delivery had recovered to trade at $22,950, against $24,100 at the close Friday. The grey metal reached a two-year low last week of $22,350 a tonne.
'Nickel prices are likely to continue to trade heavily over the medium to long term,' said JP Morgan analyst Michael Jansen. 'This reflects two major price drivers -- ongoing substitution towards nickel in pig iron in China (at the expense of cathode) and an acceleration in western world mine supply.'
With a string of new mines expected to start producing nickel in the next few years, the increase in mine supply from 2010 onwards could be 'quite spectacular', he said.
'We now anticipate that the nickel supply/demand balance will be a significant surplus for 2008 into 2010 at least, and quite possibly for a year or two afterwards,' he added.
Among other metals traded on the LME, tin rose to $24,000 against $23,775. Lead edged up to $2,020 per tonne against $2,010 per tonne at the close on Friday, and aluminium climbed to $3,005 a tonne from $3,002.
Zinc was trading at $2,161 against $2,150.
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