Base metals on the London Metal Exchange (LME) were mixed on Friday but closed off the day's lows on dollar weakness, with zinc and aluminium briefly touching their multi-year peaks, traders said. Three months zinc ended up $10 at $1,440 a tonne from Thursday's London kerb close. It hit at one time a new 7-1/2-year peak of $1,444 in afternoon rings and $1,446 on the screen trading system, LME Select. Lead gained $5 to $978.
"They (zinc and aluminium) are leading the way," one trader said, referring to drawdowns in LME stocks and strong demand, especially from China.
Aluminium was down $16 at $1,990. The market jumped earlier to $2,016, a fresh 10-year high. In early morning trade, it fell to $1,950.
The dollar weakened in volatile trading on Friday after a report showed the US trade deficit widening in January to its second biggest on record, making dollar-based commodities more attractive to investors holding other currencies.
Copper was down $8 at $3,242. The market dipped earlier to $3,175, down $125, or about 4 percent, from Tuesday's record high of $3,300 on LME Select.
Analysts said the market remained worried about a possible fund sell-off after copper hit an all-time high earlier this week and aluminium and zinc touched 10-year and 7-1/2-year peaks, respectively.
"The market is volatile, but because of uncertainty volumes are not that good," Standard Bank analyst Robin Bhar said.
"People are nervous and cautious as it's easy to be burnt. It's a vicious circle.
As copper closed below $3,280 on the weekly charts, he said there would be more fund selling next week, and he put support at Friday's low of $3,175.
Barclays Capital said in a daily note: "After recent strong price gains, the base metals are coming under some technical selling pressure, but there is still little to suggest that the underlying upward prices trend in the industrial metal markets has now ended."
Barclays' Ingrid Sternby said: "The high prices have brought physical business to a halt. There has been a lot of speculative buying and they have reached maximum length."
John Meyer of Numis said in a report: "Prices have moved so far that margin calls on forward deliveries may be restricting the brokers from putting on new positions due to the availability of credit lines.
"This is limiting business potential and is probably drying up the market to some extent."
Nickel was $120 up at $16,075 and tin rose $50 to $8,490/500.
Comments
Comments are closed.