Base metals climb; LME nickel down

Base metals have largely maintained gains on the London Metals Exchange Tuesday, as trend buying and short-covering continued, lead by copper.

Momentum in London Metal Exchange three-month copper slowed after hitting a fresh 7-month high earlier, as traders noted its bull run looked overdone.

Copper has risen 5.5% since Thursday's kerb following news that Chinese copper exports rose 22% on the month in March and stronger-than-expected U.S. jobs data Friday.

While preliminary data showed Chinese imports in the January-March period were up 58% at 776,576 tons, however, one ring dealer called the market's response exaggerated.

Figures for comparison from last year were unusually low due to China's destocking program this time last year, he pointed out, adding that trade buying at current high levels was scarce. "But people want to see (copper prices) going up," he added.

Looking ahead, if a break above $8,000/ton prompts further short-covering, copper prices could eye last May's all-time highs of $8,800/ton, said UBS analyst Robin Bhar.

Meanwhile, LME three-month aluminium has hitched a ride on copper's coattails, with news that China's aluminium exports fell for a fourth successive month adding to positive sentiment, Barclays analysts said.

March aluminium exports were down at 38,500 tons, down 22% on the month, the bank noted.

The three-month nickel contract posted a fresh record high at $50,150/ton before retreating to close 2% down from Thursday, as profit taking kicked in a broker said. Yet three month nickel remains 9% higher on the week, on ongoing inventory drawdowns amid less than two days' worth of supply.

Lead price support is coming from recent supply disruptions at Ivernia's Magellan lead mine and low LME inventories, compounded by a further 950 ton inventory drawdown. The LME three-month contract finished up 2% on the day, after hitting a fresh record $2,045/ton earlier.

LME three-month zinc remained underpinned by short covering from industry on signs of improving demand from the stainless steel sector, and finished up 3.3% on the day.

Prices in dollar a metric ton.
3 Months Metal     Bid-Ask        Change from
                                 Thursday PM kerb
Copper          7720.0-7730.0        Up 390
Lead            2020.0-2021.0        Up 30
Zinc            3550.0-3551.0        Up 120
Aluminium       3550.0-3551.0        Up 710
Nickel         48400.0-48500.0       Dn 1000
Tin            14125.0-14150.0       Up 175