London Metal Exchange (LME) aluminium prices ended above $1,900 a tonne for the first time in 9-1/2 years as fund buying extended to the close, traders said on Wednesday.
MOST OTHER METALS WERE SOFTER: Buying in aluminium had been triggered by reports earlier this week that China plans to remove tax rebates on aluminium exports and introduce a tax next year to restrict over-capacity and high exports of energy-intensive production, traders said.
However, analysts noted possible window-dressing as hedge funds drove up prices to maximise year-end bonuses and attract more money to commodities in 2005.
Aluminium was up $30 from Tuesday's kerb, ending at $1,905 a tonne, its highest since August 1995 as it extended the advance that began in late London trading on Tuesday.
It peaked in the midsession at $1,915.
"I think the market will be choppy but I expect it to stay up at these levels for the rest of the year," one London trader said.
Traders said the next target was $1,950.
Some industry sources questioned the durability of the rise, particularly as traded volumes were thin, which had exaggerated price moves.
"We think funds are...taking advantage of the fact that few sellers want to sell into a thin, year-end rally," Man Financial said in a report.
"Tempting as it may seem, we would not be chasing this latest move higher, as the lack of volume and rising open interest makes the market vulnerable to a drop similar to the one we saw back in October."
Late selling washed through the copper market at the close and the price fell $21 to $3,070.
Three months copper peaked earlier at $3,157.50, when it looked capable of challenging October's near 16-year peak of $3,175.
"Copper has been offered down quite aggressively this afternoon. It is looking very volatile, which shows just how nervous the market is," the first trader said.
Zinc was down $18 at $1,218 as profit-taking weighed.
Nickel weakened by $300 to $14,650, but lead was up $1 to $944.
Tin lost 3.7 percent, or $325, to $8,450.
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