Nickel Rises to 19-Year High, Copper Gains on Supply Concerns
2006-07-12 10:06 (New York)
By Katy Watson
July 12 (Bloomberg) -- Nickel rose to a 19-year high and
copper jumped to a six-week high on concern that global metals
production will fail to keep pace with demand as miners threaten
strikes in South America and global inventories decline.
Unions at Codelco, the world's largest copper producer, are
seeking higher wages and workers at BHP Billiton Plc's Escondida
mine are threatening a strike. Nickel has surged 39 percent in
the past month, and copper is up 16 percent, nearing record
highs reached in May. Aluminum, zinc and gold also rose.
``Supply concerns are back on the markets' minds for now,''
said Roy Carson, a London-based trader at Triland Metals Ltd.,
one of 11 companies trading on the floor of the LME. ``The
psychology is quite bullish.''
Copper rose $260, or 3.3 percent, to $8,170 a metric ton at
3 p.m. on the London Metal Exchange, after reaching $8,195, the
highest since May 30. Prices are up 85 percent this year and are
nearing their record high of $8,800, reaching May 11. Copper
inventories have declined 17 percent since June 11.
Copper futures for September delivery climbed 10.5 cents,
or 2.9 percent, to $3.74 a pound at 10:02 a.m. on the Comex
division of the New York Mercantile Exchange. A futures contract
is an obligation to buy or sell a commodity at a set price for
delivery by a specific date.
``Copper is a driving force right now,'' because of the
threat of walkouts and supply disruptions, said Marc Morgan, a
trader at Triland USA Inc. in New York. Strong demand also is
helping to revive prices, he said.
Nickel Rally
Nickel, a metal used to make stainless steel, rose for an
11th straight session in London, extending its gain to the
highest in at least 19 years inventory declined.
Stockpiles of nickel monitored by the London Metal Exchange
fell 2.1 percent to 8,244 metric tons, the lowest since Aug. 22,
the LME said today to a daily report. Inventory has dropped 78
percent this year. Stockpiled nickel may be needed by consumers
to compensate for a shortfall in production forecast for this
year by some analysts.
Nickel for delivery in three months on the LME rose $1,050,
or 4.1 percent, to $26,550 a ton, the highest since at least
1987. The metal has gained 97 percent this year and may reach
$27,000 to $28,000 a ton, Carson said.
The price of nickel rallied as demand strengthened, led by
surging production of stainless steel in China, Beijing Antaike
Information Development Co., which advises the Chinese
government on industry policies, said July 7.
Stainless Steel
Chinese stainless-steel production will rise more than 25
percent to 4.7 million tons this year, boosting demand for
nickel by 35,000 tons, or half the projected increase in global
demand, Antaike analyst Xu Aidong said. Global nickel use may
rise to 1.33 million tons this year from 1.26 million tons last
year, she said.
Credit Suisse Group said last month 2006 demand will
outpace output by 15,000 tons. LME stockpiles are sufficient for
three days of demand, Barclays Capital analysts led by Kevin
Norrish said in a report yesterday.
``There are now very real concerns that many consumers will
simply not get the nickel they require over the coming months,''
Barclays said.
Industrial metals reached record highs in May, propelled by
China demand and investments by hedge funds, banks and other
money managers. Concern about rising global interest rates led
to a decline in metals prices and copper fell as much as 25
percent on June 13, from its record high a month earlier.
No Fed Fears
``The situation now is one where the market is not as
fearful of Fed tightening,'' said Michael Lewis, head of
commodities research at Deutsche Bank AG in London.
Among mining equities, Xstrata Plc stock gained 5.6
percent, to 2,134 pence, BHP Billiton rose 2.1 percent to 1,093
pence and Antofagasta Plc shares added 3 percent to 445.5 pence.
There's a ``renewed enthusiasm'' for commodities, said Nick
Moore, an analyst at ABN Amro in London. The recovery ``across
whole sectors is indicative of the fact that after the sell-off,
people are re-entering'' commodities markets and there's an
improved ``general appetite for risk,'' he said.
Zinc rose $65 to $3,585 a ton; lead rose $45 to $1,155 a
ton, aluminum advanced $67 to $2,675 a ton and tin was unchanged
at $8,900 a ton.
--With reporting by Chia-Peck Wong in Singapore. Editor: Stroth |
