LONDON: Copper hit its highest level in three weeks on Thursday and nickel surged to a new 14-month peak as seasonal Chinese demand for metals ramped up and concerns over nickel supplies prompted more speculative buying.
All base metals on the London Metal Exchange pushed higher, including tin, which hit a 6-1/2-month high on continued tight supply from major producer Indonesia.
Three-month copper on the London Metal Exchange ended 1.2 percent higher at $6,753 a tonne, after hitting a session high of $6,771, its strongest since March 7.
"People are looking for slightly firmer demand out of China. We're saying that Q1 is the cyclical low, and we are expecting the economy to gradually pick up from Q2," said Grant Sporre, head of metals research at Deutsche Bank.
"Today's gains are a combination of the expectation of improvements in the global economy and some data points that have highlighted that many of these markets are potentially not as oversupplied as the most bearish expect them to be."
For example, while many people expect higher mine supply to push the copper market into surplus, the International Copper Study Group said the refined copper market showed a 53,000-tonne deficit in January.
April and May are seasonally strong months for copper consumption in China amid brisk construction activity.
"Demand is picking up right now because April is a strong month for copper demand in China. A lot of Chinese refineries are also selling their copper to the bonded warehouses which limited the supply in the domestic market," said Guo Hao, analyst at Jinrui Futures in Shenzhen.
But expectations of increased global supply of copper this year capped gains in prices of the industrial metal, which has lost 9 percent of its value this year.
NICKEL TO TOUCH $20,000?
LME three-month nickel closed 0.2 percent lower at $18,350 a tonne having earlier touched a session high of $18,600 a tonne, its strongest since Feb. 6, 2013.
Nickel has gained more than 33 percent this year, far more than other base metals, as an Indonesian ban on exports of unprocessed ore from January tightened supplies of nickel ore which top buyer China uses in the production of stainless steel.
"It's a difficult call to know how much further momentum will take nickel. My call is that it spikes to $20,000 a tonne, but right here I think the market has moved ahead of fundamentals," Sporre said.
LME tin, untraded at the close, was bid at $23,725 a tonne, 0.1 percent lower, having earlier climbed to a session high of $23,849 a tonne, the highest since Oct. 8 last year.
Lead, also untraded at the close, was bid at $2,168 up 0.4 percent, while zinc closed 0.6 percent higher at $2,072 and aluminium rose 0.1 percent to $1,877 a tonne.
In industry news, Freeport McMoRan Copper & Gold Inc reported a decline in first quarter profit on Thursday, hurt by lower copper prices and a conflict with the government of Indonesia that has halted its copper concentrate exports from the country.
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