Nickel hits new high

Base metals rallied on Thursday, with nickel hitting a new high and aluminium gaining over two percent, but prices may face pressure as stocks rise and the gloomy economic outlook is reinforced. Firmer metals prices helped bolster mining firms such as London-listed Rio Tinto, Antofagasta and Xstrata, which all closed over 2 percent higher.
Nickel for delivery in three months hit a new high of $34,875 per tonne on the London Metal Exchange, before closing at $34,800, up from Wednesday's last quote of $33,250/33,800. The market was illiquid as many consumers had been taking a step back ahead of the year-end holidays, running down their inventories.
"When the market is thin you can move it on very little... and once aluminium broke through $2,850...it dragged the other metals with it", an LME trader said.
Aluminium was in the spotlight, rising $63 to close at $2,863, and copper closed 1.5 percent higher at $6,780 versus $6,680 at the previous session's close. Copper prices have fallen by 23 percent since an all-time high of $8,800 a tonne was recorded on May 11.
Rising stocks have dampened sentiment. Analysts say inventories might reach 200,000 tonnes in 2007 from nearly 173,000 on Thursday and little more than 25,000 last July. "With the relentless stock falls now no longer evident, it looks as though the dynamics of the market have changed," analyst William Adams at BaseMetals.com said in a research note.
Recent data from the United States has raised expectations a US economic slowdown could turn into a hard landing and dampen global growth, which would hit demand for metals. Others expect wage disputes and the possibility of supply disruptions to support copper and other base metals. "We're not out of the woods yet," a second trader said.
Labour contracts for more than 6,000 workers at Codelco's Norte division expire in December and members of two unions meet on Thursday to review progress in talks. Swiss-based Xstrata presents a new wage offer to workers at its Altonorte smelter in northern Chile later on Thursday, which it is confident will be accepted.
Brazilian miner CVRD said it hopes to continue with the Goro nickel project in New Caledonia by the end of January after local opposition has held the 60,000-tonne per year project back.
Aluminium prices were supported by falling LME stocks, down by 5,700 tonnes to 661,500, and talk about a possible shortage due to rumoured Chinese tax changes and the January options expiry. "There are large options outstanding for the January option declarations at the $2,950 and the $3,000 strikes," analyst Roy Carson at Triland said. Tin was indicated at $11,050/11,075 against $10,925, lead was at $1,665/1,668 versus $1,650 and zinc closed $70 or 1.6 percent higher at $4,360.