Metals post fresh peaks

10 May, 2006

Base metals powered to fresh peaks by the close on the London Metal Exchange (LME) on Tuesday as buying by speculators washed through the market, dealers said.
"This is cross-asset buying. I guess that the commodity index funds are behind it. Much of the attention seems to be on aluminium but there are no particular fundamentals for that," Bache Financial minerals strategist Angus MacMillan said.
Aluminium hit an 18-year peak of $3,029 a tonne, copper touched a new all-time high of $7,865 and zinc climbed to a record $3,503.
"It's the usual speculative fund buying coming in again. There is no stopping it," an LME dealer said. Precious metals and oil were also firmer.
"Aluminium is catching up with the rest of the complex, it was always projected to hit $3,000 or beyond," a second trader said.
Aluminium closed at $3,013, up $85.
A narrowing in the cash-to-three-months contango was also supportive, moving in to trade at around $9/6, compared with around $20 at the end of last week.
Barclays Capital analyst Ingrid Sternby said: "We have recognised in recent weeks that things are coming together for aluminium."
Sternby said stocks of the metal were falling, China appeared keen to rein in breakneck expansion by its power-hungry aluminium industry and demand was being buoyed by world growth.
"The support we have seen in prices has resulted in a positive trend and above $3,200 is the technical goal."
Copper closed at $7,815, a gain of $185, and was expected to challenge $8,000 in the near future.
"I think the price could go to $9,000. The market is already up $50 from the close," the first LME dealer said.
At 1624 GMT copper was at $7,850/60.
Dealers noted fees for converting copper ore into refined metals had dropped sharply in recent weeks, indicating that ore supplies were getting tighter.
"The copper concentrate market is tightening very quickly. That may mean there won't be enough concentrate for the smelters," a trader said.
Zinc was at $3,475 by the close, up $85.
Falling zinc stocks, down 1,175 tonnes to a new five-year low of 253,425 tonnes, were supportive.
Nickel was at $19,900 from $19,450. Tin traded at $9,425/50, against $9,300, while lead jumped $50 at $1,280.

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