Nickel surged 4 percent to a one-month high on Thursday after BHP Billiton declared force majeure at a plant in Colombia, adding to supply concerns, while other metals also gained as investors cancelled bearish positions. Copper jumped to its highest this year as the dollar fell following weak US growth data and cautious comments from the Federal Reserve. A weaker dollar makes dollar-priced metals cheaper for non-US investors.
"LME metals put in a strong performance today as the weaker dollar, slightly higher oil prices and an improving technical picture sparked a wave of short covering," broker Sucden Financial said in a note. Three-month LME nickel rallied 4 percent to an intraday peak of $13,950 a tonne, the strongest since March 26, before trimming gains to close at $13,925. The metal hit near six-year lows earlier this month.
BHP Billiton , the world's largest mining company, said union blockades at its Cerro Matoso nickel operation in Colombia had forced it to declare force majeure with some customers. However, LME nickel stocks have more than trebled to record highs of around 445,000 tonnes since mid-2012, easing fears the market could slip into a deficit this year.
"LME nickel stocks are equal to almost a quarter of annual supply," said Sergey Raevskiy, metals analyst at SP Angel. Copper climbed 3.1 percent to a high of $6,335 a tonne, the strongest since December 31, helped by expectations that China will be forced to take extra stimulus measures. Copper failed to trade in closing open outcry activity and was last bid at $6,335.
Aluminium also failed to trade in closing rings and was bid at $1,924.50 a tonne, up 2.2 percent and the highest in over four months. It was pushed up by the dollar and technical buying but traders do not expect it to last long. "I can't see it (aluminium) breaking the 200-day (moving average of about $1,920)," said a Hong Kong-based trader. Lead finished up 1 percent to $2,110 a tonne, having hit its highest since September last year at $2,115.
"We do not perceive a particularly encouraging set of fundamentals. We thus tend to have a bearish view at these price levels, targeting a fade to about $1,950/t this quarter," said analyst Vivienne Lloyd at Macquarie in a note. Zinc closed 2.2 percent higher at $2,345 a tonne, the highest since last October, and tin gained 1.8 percent to end at $16,025.
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