LME copper makes modest gains, other metals mixed

Base metals consolidated in light volumes on the London Metals Exchange Friday on position squaring ahead of the weekend and a fresh assault on the market next week.

However, traders and analysts were mixed on whether the three-month copper correction has fully played itself out.

"The general consensus in copper is on the upside, but the problem is that nobody can agree on whether the correction is over," a broker said.

LME copper was trading at $7,740/metric ton at 1636 GMT, up 0.5% on the day, but $230 lower than its 10-month high this week of $7,970/ton.

Brokers said a a technical push to $8,000/ton resistance is all but guaranteed early next week, and a "peaceful demonstration" at PT Freeport Indonesia's Grasberg mine next week could prove the trigger.

Grasberg contains the largest single copper reserve and the largest single gold reserve of any mine in the world. Further drawdowns in global inventories continue to underpin copper prices – 250 metric tons on the LME, 441 short tons on Comex and a weekly fall of 112 tons on the Shanghai Futures Exchange, Barclays noted.

A strong pick-up in Chinese demand and a stabilization in the U.S. housing market are also adding to price support.

Positive sentiment from a copper rally would likely wash over the rest of the complex, with upside potential for LME zinc and the three-month nickel contract potentially revisiting $50,000/ton, a broker said.

LME aluminium may prove the exception, the broker noted, as producer selling continues to cap the metal from climbing above $2,900/ton.

The main risk for aluminium prices is the rise in alumina production and possible Chinese net exports during 2008, said Man Financial analyst Edward Meir.

Next week should be busier with more macro-economic data out of the U.S., he added.

The rest of the metals were fairly quiet, with nickel and lead barely in the green, while zinc and aluminium were marginally lower and tin was flat.

Prices in dollar a metric ton.
3 Months Metal     Bid-Ask        Change from
                                 Thursday PM kerb
Copper          7700.0-7705.0        Up 20
Lead            1995.0-2000.0        Up 20
Zinc            3478.0-3482.0        Dn 22
Aluminium       2812.0-2813.0        Dn 18
Nickel         46400.0-46500.0       Up 100
Tin            14350.0-14400.0       Up 125