Copper was higher in London on Friday as investors moved to cover exposed bets on falling prices ahead of the weekend, but a three-week run of inventory rises worried investors, dealers said. Copper for delivery in three months gained $85 at $7,330 a tonne at the close in London, but remained locked within well-worn ranges.
A rise in copper stocks of 1,925 tonnes to 141,400 tonnes in LME warehouses, after rises in Rotterdam and New Orleans. weighed on early sentiment and copper dipped to $7,225. Stocks are now at their highest since May 2004. Aluminium was up $27 at $2,782, with support pegged between $2,700 and $2,725 and world No 2 producer Alcan expected a tight market to prevail in 2007.
"We forecast that the market will be in deficit by around 300,000 tonnes this year. For 2007, we see aluminium in balance, plus or minus 200,000 tonnes so the market will remain tight," Jean-Philippe Puig, head of Alcan's European primary metal division, said.
Zinc ended up $32 at $4,292, while nickel was at $31,400 from $31,750/31,800. "Technical analysis is pointless for nickel and zinc. Those markets are purely driven by the low physical stocks," a trader said.
Zinc stocks were at 102,975 tonnes down from over 600,000 tonnes in mid-2006 and were expected to break the psychologically important 100,000-barrier early next week. "Zinc is going to see $5,000. Everything seems to be pointing that way. The stocks are getting ever tighter and I think it's only a matter of time," a second dealer said.
Nickel stocks at 6,684 tonnes are less than two days of world consumption. France's Eramet said it was producing nickel albeit at a reduced rate at its Doniambo plant in New Caledonia, despite a strike on the Pacific island. Lead rose $15 at $1,680, short of this week's contract high at $1,700.
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