Copper looks set to build on midsession gains in later trading and drag the other base metals higher, London Metal Exchange (LME) dealers said yesterday
"There's been good follow through and support from fund buying so I expect to see copper at $1,950 next," said one floor trader. Others were less bullish, saying that $1,920 was the limit before copper sank back down in the previous range.
Last trade of the morning was $35 steadier at $1,903. In an active pre-market copper reached its highest level since November 20 at $1,904 on short covering, fund and technical buying sparked by a large LME stock drawdown. Stocks fell by 7,125 tonnes on Wednesday, including 5,450 tonnes out of Hamburg - taking the week's decrease to 17,975 tonnes so far - and dealers said there was more to come.
This was backed up by an increase in cancelled warrants, indicating tonnage due to be shipped out, to 26,550 tonnes. But 17,000 tonnes were expected to be delivered in to Spanish warehouses over the next few days, putting pressure on prices, although it was not known how much would end up on warrant. Dealers said that the lack of supply out of Russia, where
production had been frozen in transit, had increased the tightness, adding to bullish sentiment. Buying against May options had also helped boost prices, according to traders. Forwards remained tight, in backwardation but cash/threes was in a $10 contango after easing to $5 in the pre-market.
Other metals were higher with copper, but dealers said they were still ranging. Dips were seen as a buying opportunity. Aluminium steadied at $1,470, at the top of the range and needed to decisively break to make progress to $1,485. Zinc moved higher, breaching $1,126 chart resistance to close at $1,137, a $22 gain. Lead rose $2 to $580/581 after dipping back in the rings. The market was seen capped at $582. Tin gained $35 to $5,665 as the cash/threes backwardation edged out to $60/69.
Nickel moved higher in the range to $5,575, while alloy last traded $9 higher at $1,328.
