Base metals prices ended strongly higher in Thursday's London open-outcry trading, with zinc up at 7-1/4-year highs on news of a Japanese mine closure and others lifted by the weaker dollar, traders said. "There was stop-loss buying and CTA (Commodity Trading Advisor) buying above $1,315/320 a tonne and when the dollar reversed its gains we saw further short covering and trade buying," a trader said.
The dollar initially strengthened after US December trade data, but then fell steeply as caution overcame enthusiasm that the trade deficit had narrowed.
The trade gap was $56.4 billion, much as forecast, against $59.3 billion in November. But the annual trade gap widened to more than 24 percent in 2004 to a record $617.7 billion.
Zinc touched new 7-1/4-year highs on speculative and stop-loss buying triggered after Japan's Nippon Mining Holdings Inc said it would close its Toyoha mine.
The mine, which produces zinc and lead, will close at the end of March 2006 as resources had been exhausted.
Zinc concentrate production at the end of March was estimated at about 83,000 tonnes, while lead production was estimated at about 9,000 tonnes.
Three months prices ended the rings at $1,328 a tonne, up from $1,286 at Wednesday's kerb close. Lead ended at $918, up $11.
Copper and the rest mostly reacted to the weaker dollar, traders said, leaving like-traded commodities cheaper for holders of other currencies.
By the end of the rings prices stood at $3,053, up $50 from Wednesday.
"We saw some option buying, possibly against March, and that took it towards $3,030," a floor trader said.
Traders said metal continued to be warranted against tight nearby prompts, ahead of next Monday's "third Wednesday" pricing.
Aluminium cleared the 100-day moving average around $1,818, triggering covering and settling at $1,846, up $34. Nickel rose to $15,340 from $15,150.
On Thursday producer Outokumpu said the nickel market was likely to be close to balance in the short term.
"Low stocks, good demand from stainless-steel producers and speculative trading are forecast to keep the market volatile," it said after its fourth quarter results.
Tin was at $7,950/990 from $7,835.
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