The London Metal Exchange base metals ended the session on a firm note Monday and analysts expect further price strength to emerge as a seasonally stronger period for demand kicks in.
Copper in particular looks poised to launch an assault on $7,000 a metric ton, with the market gaining 2% to end $30 shy of this by the end of the session.
And the end to a strike at CVRD's Sudbury operations failed to dampen sentiment for LME nickel, with production restarting following a temporary halt at the weekend. The market ended up 1% at $45,600/ton, a rise of 5% from Friday's low.
An upwards path for base metals prices may not be immediately assured, however. Traders said the approaching closure of the LME on Friday and Monday due to the Easter holiday period is leaving players cautious of building or adding to new positions.
Whether the investment fund community returns to make fresh allocations for the second quarter to the base metals will also determine near-term price direction. So far this buying interest hasn't materialized in any significant force, and traders said it may not be forthcoming until the markets resume trade after the holiday period.
The main fundamental market development of note was in aluminium, with residents of a small municipality just south of Iceland's capital Reykjavik voting at the weekend against a planned $1.2 billion expansion at Alcan's Isal smelter in Straumsvik.
The situation is a major blow for Alcan's growth strategy, as the expansion would have boosted capacity from 180,000 tons to 460,000 tons a year, representing an 8% hike in global smelting capacity.
Alcan has said it will "carefully analyze" the vote result and review all of its options. Although LME aluminium didn't react to the news, the situation may affect the market going forward as Alcan officials have in the past mooted withdrawing from Iceland altogether if its expansion cannot proceed.
Prices in dollar a metric ton.
3 Months Metal Bid-Ask Change from
Friday PM kerb
Copper 6970.0-6971.0 Up 120
Lead 1925.0-1926.0 Up 15
Zinc 3150.0-3160.0 Up 100
Aluminium 2755.0-2756.0 Up 23
Nickel 45600.0-45700.0 Up 800
Tin 13740.0-13745.0 Up 340
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