London, 22 April 2008 - Base metals rose persistently on the LME on Tuesday, with renewed dollar weakness the principal driver as the currency plumbed fresh record lows against the euro, although some metals have fundamental support -- tin jumped 4.4 percent to a new all-time high.
Copper, too, bounded higher after a mediocre start, with the current Codelco stoppage entering its seventh day and no sign yet of an end to the impasse. "For now, the prospect of fresh lows in the US currency, coupled with the unsettled Chilean labor dispute, should combine to keep the metals rally going via a stronger copper complex," Ed Meir of MF Global said. The dollar fell to a new low-point of $160.17 versus the euro. "And, of course, there is no stopping the energy markets, which continue to push higher, casting a bullish shadow over metals," Meir added. Oil rose to a record high of $119.74 -- nearing $120 a barrel - boosted by a jump in oil demand last month from China, the world's second biggest energy consumer, and worries about supply from key producers Russia and Nigeria. Equity market weakness was also put to one side on the LME, while US data was not high profile today, with March existing home sales coming in much as expected at 4.93 million, against a previous 5.03 million. But slack investment interest continued to prevail, as the metals complex seems to have settled into a pattern of routine movements, partly induced by wider financial market trends, and partly by technicals and individual fundamentals. "There are definite signs of risk reduction coming through now. The firms with banks as parents are not taking out such big positions," a floor trader said. Banking worries stayed at the forefront of investors' minds after Monday's softer than expected results from Bank of America Corp, the biggest US retail bank. Banks are under pressure to reveal the full extent of their writedowns on assets linked to the crumbling US housing market with recent economic data pointing to an economy on the brink of, if not already in, recession. TIN JUMPS STRONGLY ABOVE $22,000 TO FRESH PEAK Tin was underpinned by from the outset by a 2.5 percent fall in LME warehouse inventories -- stocks fell 205 tonnes to 7,990 tonnes, just 10 tonnes above recent 2-1/2 year lows. Further falls are likely, as there are 560 tonnes of metal under cancelled warrant and due for removal. Business was seen as high as $22,650 a tonne, with the market ending at $22,475/22,500, up $825, or 3.8 percent, from the Monday close. "Tin has perhaps the clearest direction of all the complex at the moment with concerns over supplies from China and Indonesia meeting head on with increased demand for the metal," Standard Bank added. On the wide supply-side, the market has risen on fears that production and exports from China and Indonesia, the world's biggest producers, will fall short of expectations. In Indonesia, the government is widely believed to be imposing restrictions on mining activities, that will restrict annual output to some 100,000 tonnes. China, meanwhile, expects to boost its internal consumption, which will reduce the amount of metal that the country will be able to export. COPPER AND CODELCO Copper hopped around the $8,700 level as the ongoing Codelco subcontractors strike dragged on. Codelco is the world's biggest copper producer, and its Salvador and Andina divisions have remained shut since the strike began last Wednesday. The firm was studying if it can resume operations at its Teniente deposit -- which it announced late Monday it had temporarily suspended through Tuesday morning. Disruptions since the weekend forced Teniente, Codelco's second biggest division, to operate with a skeleton staff as protesters prevented workers from beginning their shifts. Prices recovered strongly from early levels below $8,500 to end at $8,700, up $185 from the Monday close. Elsewhere, aluminium reversed direction after threatening to test the $3,000 level on the downside, finishing at $3,085, up $45, with inventories declining by 1,025 tonnes. Zinc was $50 higher at $2,270/2,271, maintaining recent whippy movements, with stocks falling 900 tonnes. Sister-metal lead was $70 higher at $2,840 - stocks fell 200 tonnes. Nickel shrugged off a 228-tonne increase in inventories to 52,308 tonnes, the highest since July 1999, following the general trend, instead. It ended at $28,900, up $450. Steel's slow start to the week continued, as both billet contracts consolidated around record highs, gearing up for the 'hard launch' on the LME floor next Monday. August Med delivery traded at $950, up $15, and equalling its record high. Far Eastern billet was bid at $890, versus Monday's $940/960. <http://www.basemetals.com> BaseMetals.com
