Base metals steady

Copper prices were steady in London on Wednesday after falling sharply on Tuesday and conditions were likely to become choppier ahead of a major industry gathering in London next week, dealers said.
At the same time, falling nickel inventories helped propel prices to within about $500 of a new record high. Copper for delivery in three months on the London Metal Exchange was at $7,370 a tonne at midday, up $30 from Tuesday's close. Earlier, copper, a mainstay of the rapid economic expansion in China, India and Brazil, was hit by a bout of selling that knocked it down to $7,250.
This compounded hefty losses in Tuesday's session, defying forecasts for price support on the back of shrinking supplies. "The market is being bid up after the selling on Tuesday. Volumes are reasonable and (the) options expiry seems to be passing quietly," a trader said.
Expiration of LME options passed without a hitch, with little evidence of large-scale 'delta hedging' against options that are likely to be exercised. Dealers said the start of LME Dinner week on Monday, where producers, consumers, analysts and traders from around the world gather in London for a series of meetings, seminars and parties, could aggravate price swings.
"People are starting to head to London for LME week and that means less volume but more volatility," the trader said, Copper, which doubled in price from the start of the year to May to hit $8,800 a tonne, has since staged a "dismal performance as fund selling ravaged the market", BaseMetals.com analyst William Adams said in a report.
Chile's Codelco, the world's largest copper producer, has set European annual copper premiums at a record $125 a tonne for 2007, up $20 from 2006, trade sources said. Premiums for US consumers in 2007 were set at 4.50 cents/lb ($100 a tonne) versus 4.25 cents for 2006, they added.
The decision was in line with market expectations of European premiums between $120 and $130 a tonne suggesting availability will remain tight. The International Copper Study Group this week forecast that a global copper surplus of 239,000 tonnes in 2006 should shrink to 176,000 tonnes in 2007.
Based on global consumption rates, LME-held copper stocks at 116,975 tonnes would last fewer that three days. "It does not leave a lot of room for any unexpected supply disruptions," Adams said. Nickel rallied $945 to $29,445/29,500, flirting with August's record $29,950 high, supported by stocks falling to their lowest since August.