Metals Report: Confidence from US raises prices.
Aluminium last week adopted the mantle usually worn by copper as market leader on the London Metal Exchange with a strong performance taking its three months price up by $80 per tonne to a $1,757 close on Friday.
All eight contracts recorded net gains over the period with the real upward drive generally starting on Thursday as funds returned in force.
A major catalyst may have been the better than expected data from the Institute of Supply Management in the US on the state of manufacturing activity in that all important country.
The feature contract was undoubtedly that of tin as it gained $810 per tonne to a new 14 year closing high of $8,900, having touched $9,100 earlier in the day on Friday.
Exchange warehouse stock movements went some way towards showing why markets are currently so strong with a clean sweep of net drawdowns.
Copper: Very much taking a back seat, this contract had only gained $20 by Wednesday's close at $2,978. Thursday was much better with $3,015 close and then on Friday a high for the week of $3,044 was recorded before the price again retreated to close the week only $19 up at $2,976.
The backwardation was still a very respectable $77 per tonne while stocks fell by 17,050 tonnes. Rumours continued of a slight drop in demand from China but overall the market remains firm.
Aluminium: Having just survived the downside pressure of the previous week, aluminium was up and away from the off last week as it broke overhead resistance levels at $1,680, $1,700 and $1,740 before finally recording a high for the week of $1,772 on Friday.
There was aggressive fund and chart buying on the way up as well as further demand from Japan.
The price rise was also backed by 41,675 tonne decline in exchange stocks.
Encouraging demand growth is now been seen in most market areas other than in Europe where conditions remain slow.
The two alloy contracts performed well with the one gaining $30 to $1,620 as stocks fell by 1,920 tonnes while the US version put on $55 to $1,755.
Zinc: For the first three days zinc continued to struggle to stay above the all important $1,100 barrier. Wednesday's close was at $1,110 but then this market joined in the general upward trend on Thursday with a $1,138 finish.
Friday produced a high of $1,152 before the $1,123 close for an overall gain of $23 per tonne, stocks having fallen by 1,600 tonnes with one large deposit on Wednesday spoiling what should have been a good decline.
Demand from China and Japan is good as it is in the US so, if hedge selling allows, we may well see higher prices to come.
Lead: Nothing very exciting as the forward price traded pretty evenly throughout the week.
Thursday did produce a slight flurry of fund buying which took the price up $20 to a high of $42 but it was then lost on Friday with the $822 close, being a gain of $5 over the week. Stocks fell but by only 950 tonnes.
The Teck Cominco force majeure on deliveries was lifted on Wednesday so this particular producer is now back in business following the enforced closure.
Nickel: Continuing to trade either side of $14,000 for the first three days, nickel did not take off until Thursday when a high of $14,750 was recorded ahead of a $14,450 close.
Friday saw a return to $14,745 ahead of a close at $14,300 for an overall gain of $125 per tonne.
Exchange stocks fell daily by a total of 876 tonnes to 14,682.
Still in a strong $50 backwardation, this market should remain steady.
Tin: Having stuck initially in the $8,300 area in the first two days, tin then benefited from renewed fund and speculative interest to close at $8,475 on Wednesday. Thursday saw a $8,940 closing high and this was then followed by $9,100 on Friday ahead of the $8,900 close. With stocks down by 2,420 tonnes to only 6,820 and with good demand from the Far East, there is no reason why considerably higher prices cannot be seen.
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|Publication:||The Birmingham Post (England)|
|Date:||Apr 5, 2004|
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