London Metal Exchange nickel and lead charged to fresh record highs ahead of the long U.K. weekend amid speculative and fund buying across the entire complex, with strength expected to hold over the near-term, market players said Friday.
Three-month nickel touched a new record high of $51,550 a metric ton in electronic trading after the LME afternoon kerb while lead touched a new high of $2,120/ton ahead of the kerb.
LME nickel prices have jumped roughly 7% this month from a May 1 low of $47,700 a ton and have climbed roughly 50% from the start of 2007. At the same time, LME stocks have declined roughly 5% during May and are down 29% from the start of 2007.
Adding to price support, Western Australian regulators said Friday they will closely monitor loading of a nickel concentrate shipment from the Port of Esperance Friday and Saturday and may suspend loading if excessive odor and dust occurs.
Should Australian regulators find excessive odor or dust emissions from the loading of 20,500 metric tons of nickel concentrate for nickel miner LionOre Mining International Ltd., an already issued environmental field notice could include a requirement for the port to upgrade facilities before future loadings take place.
Meanwhile, lead prices were higher as the market entered into the typically stronger demand season. Lead has climbed some 5% from the month-earlier despite an increase in LME lead supplies by some 25%.
Liquidity has been low especially because key markets in Asia have been closed this week, therefore allowing prices to jump easily, traders said. Japan's markets were shut Friday while China is closed until Tuesday.
Funds piled into the nickel market after the U.S. non-farm payrolls data Friday was dollar-negative, said Roy Carson of Triland Metals in London.
The dollar slipped following news that U.S. employment grew at its slowest pace in more than two years in April. Non-farm payrolls increased 88,000 in April, after growing 177,000 in March and compared to an expected gain of 110,000, causing the dollar to lose ground against its major rival currencies.
In other base metals, hedge funds and system-based, commodity trade advisory buying poured into the LME zinc contract Friday, said Carson of Triland Metals. Earlier weakness – due to reports that a Glencore plant had restarted operations – had been overcome, he added.
The markets continue to keep a close watch on labor developments in Peru which, along with strong signs of accelerating U.S. economic growth Thursday, are adding to bullish base metals sentiment Friday, said Man Financial in a daily note.
Peru's National Federation of Mining, Metallurgy and Steel Workers said Friday that it had reached a preliminary agreement with the government to end the national mining sector strike that started Monday.
Peru's Labor Minister Susan Pinilla said Thursday that she expected a settlement in the mining sector strike by late Thursday or early Friday.
Looking ahead, a holiday Monday in London and China will exacerbate thin conditions, with potential for further fund-directed spikes, some brokers said.
Prices in dollar a metric ton.
3 Months Metal Bid-Ask Change from
Thursday PM kerb
Copper 8320.0-8325.0 Up 140
Lead 2113.0-2115.0 Up 38
Zinc 4170.0-4175.0 Up 141
Aluminium 2890.0-2895.0
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