Nickel strikes another fresh high, lead eases on profit-taking

Tue, 13 Mar 2007 – Nickel hit another fresh all time high, after the LME reported a fall in stocks, which are already at critically low levels.

Inventories of the metal stored in LME certified warehouses across the globe fell by 72 tonnes to 3,876 tonnes. However, fewer than 3,000 tonnes are available to the market – less than half a day's worth of global consumption.

'In the nickel market, traders remain focused upon the clear lack of supply as evident in the LME global stocks numbers,' noted JP Morgan strategist Michael Jansen.

At 11.54 am, LME nickel for 3-month delivery was up at 44,150 usd a tonne, up from yesterday's close of 43,800 usd. Nickel hit a high of 44,750 usd earlier in the session.

Analysts are now speculating the metal, used mostly for steel production, to hit 50,000 usd.

'We may expect a test of the 45,000-45,100 usd region next which if decisively breached could extend gains close to the 47,500 usd and even 50,000 usd areas,' said Alex Heath, head of RBC Capital Markets' base metals.

Robin Bhar, UBS analyst, also said 'further moves on the 50,000 usd target appear inevitable'.

While most base metals were trading higher, lead eased after surging by 8 pct yesterday from Friday's close on reports of further disruptions to supply in a Western Australian mine – Invernia.

Lead was down at 1,873 usd against 1,915 usd at yesterday's close.

'Lead has seen some profit-taking despite another stock draw and continued supply concerns,' said Heath of RBC Capital Markets.

LME stocks fell 650 tonnes to 30,900 tonnes, said the LME's daily report.

Inventories of the metal are down to just 1.3 days of annual consumption, based on a lead consumption forecast by JP Morgan.

In other metals, copper was flat at 6,265 usd. The market was underpinned as the market continued to draw its attention to strong Chinese demand. The Beijing-based customs office revealed yesterday that China's imports of copper and copper products in February rose 70 pct from a year earlier. Analysts are expecting this trend to continue until at least the end of March.

Tin fell to 13,650 usd against 13,700 usd, zinc was flat at 3,290 usd while aluminium was up at 2,755 against 2,773 usd.