PANIC BUYING OF NICKEL!!
Nickel soars to $35,000 on panic short covering
By Chris Flood
Published: August 17 2006 03:00 | Last updated: August 17 2006 03:00
Nickel continued to dominate action in commodities yesterday as the cash price of the metal spiked to $35,000 a tonne.
Dealers reported panic short covering yesterday - the third Wednesday of the month and the most important day for open interest. The premium allowing short positions to roll over oneday surged to $1,000 a tonne from about $100 just weeks ago.
Although London Metal Exchange nickel inventories rose 354 tonnes to 6,162 tonnes, cancelled warrants - metal already earmarked for delivery - rose to 77.7 per cent of LME stocks. The supply situation is extremely tight as global inventories have shrunk to less thanone day's worth of world consumption. Three-month nickel rose 6.4 per cent to a record $29,200 a tonne.
The oil market shrugged off the latest US weekly inventories data showing a fall in crude and gasoline stocks yesterday.
ICE September Brent fell 72 cents to close at $73.08 a barrel while Nymex September West Texas Intermediate settled $1.16 lower at $71.89 a barrel, not greatly changed from levels before the Energy Information Administration announced that crude stocks declined 1.8m barrels last week, in line with the consensus market forecast. The loss of output from Prudhoe Bay in Alaska is expected to show up in next week's data.
US demand for gasoline remains robust at 9.61m barrels a day, up 1.7 per cent compared with last year and just shy of last week's record 9.7m figure. The EIA said gasoline stocks fell 2.3m barrels, above the consensus market forecast for a decline of 1.8m barrels. Nymex September unleaded gasoline traded less than 0.5 cents higher at $1.9950 a gallon.
Copper traded at $7,700 a tonne amid a strike at Escondida, the world's largest copper mine in Chile. The union cut its pay demand to 10 per cent from 13 per cent yesterday, which management is considering.
Gold rose 0.6 per cent to $628.40 a troy ounce, helped by the weaker tone of the dollar following muted US inflation data.
Silver rose 2.5 per cent to $12.31 a troy ounce. Traders said that silver has performed better than gold recently because of the threat that some central banks may rush to sell gold before September 26, the end of the current Central Bank Gold Agreement year, as any shortfall in the 500-tonne sale limit cannot be made up next year.
Other precious metals were higher, with platinum and palladium at $1,228and $333 a troy ouncerespectively.
UBS estimates that Chinese palladium imports over the past 12 months have increased by 40 per cent compared with the same period a year ago.
Copyright The Financial Times Limited 2006
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