Base metals lower, dragged down by nickel
Source: AFX
metalsplace.com
Wed, Mar 21 2007 – Base metals were lower following a mixed session yesterday as heavy losses in nickel weighed on the complex.
Nickel, which posted new record highs in every trading day last week, has declined by some 4,000 usd a tonne this week alone and is some 10 pct off an all time high of 48,500 usd set last Friday.
At 11.28 am, LME nickel for 3 month was down at 43,220 usd a tonne against 44,600 usd at the close yesterday.
"We have written in recent commentary that a big correction in nickel would be too hard to ignore, and we still maintain that view," said Man Financial analyst Ed Meir.
He added he expects more nervous trading in the days ahead, "with a likely downward bias until the nickel correction plays itself out".
While a nickel correction has been long overdue, prices are not expected to plunge as stocks remain critically low and as demand from the stainless steel industry – which accounts for 70 pct of nickel consumption – is still strong.
JP Morgan analyst Michael Jansen said while nickel might yet make another run at the 50,000 usd a tonne mark after this correction runs its course, on a longer term view he sees lower prices for the metal.
"We see nickel prices substantially lower over the long term, our 2008 average price forecast for instance is around the 20,000 usd a tonne level, hence we remain bearish," he said.
Copper was down at 6,585 usd a tonne against 6,645 usd after having its intra-day gains pared yesterday when the International Copper Study Group released data showing a production surplus of over 350,000 tonnes in 2006.
This compares with a production deficit of 100,000 metric tonnes in 2005 and a cumulative deficit of 1.45 mln tonne from 2003-2005.
Nevertheless, analysts remain upbeat on the metal's prospects as LME stocks continue to fall and as demand from China, the world's largest copper consumer, remains strong.
The LME said in a daily report today copper stocks held in its warehouses fell further, this time declining by 950 tonnes on the day to total 189,300 tonnes. Stocks are down over 9 pct from a month ago.
"The outlook for copper prices remains solid, and we expect that 3 months will trade towards the 7000 usd a tonne level in the 1-3 month timeframe," said Jansen.
Aluminium was down at 2,778 usd a tonne against 2,794 usd, under pressure from rising stocks.
The International Aluminium Institute reported yesterday world aluminium production in the first two months of 2007 shot up to a total of 5.8 mln tonnes against 5.2 mln tonnes in the same period last year.
"The light metal remains well capped and has struggled to gain much in the way of upward traction despite others in the complex gaining ground and we believe this is likely to remain the theme," said Standard Bank in a note.
Tin was down at 13,825 usd a tonne against 14,00 usd at the close yesterday.
The metal set a new contract high of 14,150 usd a tonne yesterday amid continued concerns over supply disruptions in Indonesia, the world's second largest tin producer.
The Indonesian government, which is still engaged in a crackdown on illegal tin mining, has said PT Koba Tin will be allowed to export the metal, although the company has still not been issued with export permits.
Zinc was down at 3,164 usd a tonne against 3,220 usd while lead was down at 1,908 usd against 1,938 usd. |
