LME Metals Higher In Asia As Sentiment Firms

SINGAPORE--Base metals on the London Metal Exchange rose across the board in Asia Friday, as sentiment toward the complex appears to be slightly firmer, traders and analysts said.

The U.S.'s better-than-expected gross domestic product growth in the fourth quarter gave base metal sentiment a boost, as did overnight gains on the LME, they said.

As of 0646 GMT, three-month copper had climbed as high as $6,820 per metric ton in Asia, up $65 from the London Thursday afternoon close. Copper benefited from end-of-month short-covering by physical consumers, traders said.

Three-month aluminum edged $10 higher to $2,790/ton, while nickel moved $200 higher to $44,050/ton.

However, the market remains cautious due to concerns over the strength of the U.S. economy and uncertainties regarding supply-demand dynamics for some base metals.

"The soft spot in the market is the concern over the downturn in the U.S. housing sector and the outlook for the broader U.S. economy," said David Moore, a commodity analyst at the Commonwealth Bank of Australia. Moore added that this concern is offset by the market's belief "that growth remains relatively solid within other parts of the world."

The U.S. fourth quarter GDP rose at a revised 2.5% annual rate, above the 2.2% the market expected, the Commerce Department said Thursday.

Traders said copper would likely continue to benefit from end-of-month short-covering, but may ease in April toward $6,600 as the metal "looks a bit tired" after two days of narrow range-bound trading and faces heavy resistance around $6,900.

As well, physical copper premiums are down in almost all countries and this should weigh on LME copper, a trader at a large Japanese commodity brokerage in Tokyo said.

"I don't think copper has enough bullish momentum to break above $6,900," he said. "It's a good time to sell."

Standard Bank, in a daily note, said copper should continue to be volatile as trading houses square positions ahead of the end of the quarter, but the trend remains upward.

"(With) the tension in the gulf leading to higher oil prices, the bias should still on the whole remain positive."

Other LME base metals saw little trading in Asia. Aluminum, despite having an increasingly bearish fundamental outlook for 2007, remains steady because of the large number of call options in June, said a trader at a Japanese commodity brokerage.

Sentiment toward nickel appears to have firmed after its steady performance this week and its physical tightness should support it above $40,000, though price movements will likely be volatile, analysts and traders said.

"It's really operating in a supercharged environment," said Moore. "So you can get very large and volatile price movements based on relatively little new information."

As of 0648 GMT, three-month zinc was $40 higher at $2,790/ton; tin was up $150 at $13,400/ton; lead was untraded in Asia, and was last quoted at $1,909/ton, down $4 from the London PM kerb.