London Metal Exchange base metals traded modestly lower Friday on profit-taking, but analysts expect nickel prices to remain strong as supply concerns remain.
In general, the base metals seem a little tired, said a trader. Copper prices held above $5,800/ton but continued stock inflows and profit-taking weighed on the metal.
Copper stocks rose 4,325 tons to 207,700 tons Friday, according to LME data.
In news, BHP Billiton (BHP.AU) said late Thursday that fine copper production at Chile's Escondida mine totaled 1,255,559 metric tons in 2006, down 1.3% from 1,271,472 metric tons in 2005, due to the impact of a 25-day strike at its mine last year.
After soaring to a record high earlier Friday at $38,950 a metric ton, nickel prices retreated to a PM kerb of $38,050/ton on profit-taking.
However, prices should remain well-supported particularly as concern continues over a potential strike next week at Xstrata PLC's (XTA.LN) Sudbury nickel mine, said analysts.
In news, Xstrata said it was "very disappointed" that unionized workers in Sudbury, Ontario, rejected Thursday a proposal to agree on an early contract settlement, but the company remains hopeful of averting a strike next week as negotiations continue.
Last week, more than 1,000 unionized workers voted 98% in favor of a work stoppage if a new labor agreement isn't reached. Both sides began negotiations Dec. 11 with the hope of a resolution ahead of the expiration of the current labor contract on Jan. 29.
The Sudbury operations account for roughly 4% to 5% of global nickel supply, according to analysts.
Adding to supply support, LME nickel stocks fell 72 metric tons to 4,878 tons Thursday with just 2,658 tons available due to canceled warrants, according to LME data. The available supply consists of roughly one day's worth of global nickel consumption.
Meanwhile, aluminium prices hovered near $2,800/ton.
In news, production at the Friguia alumina refinery, operated by RusAl, is expected to return to capacity within three days despite an ongoing nationwide strike in the Republic of Guinea, Rusal's spokeswoman said Friday. The refinery, which produces 780,000 metric tons a year, reduced its output by less than 10% as a result of the strike.
In related news, Canada's Alcan Inc. (AL) said it is confident the supply of alumina to its aluminium smelters won't be affected by Guinea's strike.
The nationwide strike continues to halt output at Guinea's large bauxite producer, CBG. Four metric tons of bauxite make two tons of alumina, which in turn is smelted to produce one ton of aluminium.
Guinea, a key bauxite producer, along with Australia and Jamaica, dominates African production of the raw material. The west African nation contains 30% of the world's bauxite reserves and accounts for 94% of African bauxite production.
Meanwhile, tin prices – a recent star performer – traded modestly lower Friday but near the recent all-time high of $12,500/ton. Supply concerns in Indonesia – the world's largest tin producer – as well as overall low stocks and robust demand, continue to provide support for prices.
Tin stocks dropped 140 tons to 11,930 tons Friday, according to the LME.
Prices in dollar a metric ton.
3 Months Metal Bid-Ask Change from
Thursday PM kerb
Copper 5800.0-5810.0 Dn 59
Lead 1670.0-1675.0 Dn 32
Zinc 3640.0-3650.0 &nbs
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