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Copper and zinc hit record highs, shrug off sales

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LONDON, Apr 5 (Reuters) Copper and zinc charged to new record highs on Wednesday as fund appetite for base metals returned after a bout of selling on Tuesday, dealers said.

Investment interest was the main driver as speculative investors took advantage of Tuesday's momentary weakness to pick up metal at bargain prices and add to positions.

''There is a continuation of the buy-the-dips strategy, but now some smaller speculative types, who have been more cautious, are moving back in on the long side,'' a trader said.

''These guys tend to panic more easily when prices slip and will liquidate their longs -- that is what happened yesterday, I think, and it will set the pattern for the next weeks or months.'' Copper , which fell 1.3 percent on Tuesday to ,542, bounced smartly to trade at ,685, a new peak on Wednesday. By 1217 GMT it had settled at ,655/68.

''Momentum is still with us and ,700 and ,300 are our numbers for upside. We have seen good buying from trend followers,'' another dealer said.

Investment funds have flocked into industrial and precious metals and oil products as well as other commodities as the complex has outperformed traditional financial assets, such as equities and treasuries.

The second quarter of the year is traditionally the peak demand period for industrial metals. On the London Metal Exchange (LME), the world's largest non-ferrous metals market, warehouse inventories of all metals fell on Wednesday.

''This, and ongoing concerns over supply are likely to underpin prices, so unless some external event upsets the funds, the upward trends are likely to keep prices on the rise,'' BaseMetals.com analyst William Adams said.

ZINC SOARS Zinc , used as an anti-corrosive coating in galvanised steel production, hit a new high of LONDON, Apr 5 (Reuters) Copper and zinc charged to new record highs on Wednesday as fund appetite for base metals returned after a bout of selling on Tuesday, dealers said.

Investment interest was the main driver as speculative investors took advantage of Tuesday's momentary weakness to pick up metal at bargain prices and add to positions.

''There is a continuation of the buy-the-dips strategy, but now some smaller speculative types, who have been more cautious, are moving back in on the long side,'' a trader said.

''These guys tend to panic more easily when prices slip and will liquidate their longs -- that is what happened yesterday, I think, and it will set the pattern for the next weeks or months.'' Copper , which fell 1.3 percent on Tuesday to $5,542, bounced smartly to trade at $5,685, a new peak on Wednesday. By 1217 GMT it had settled at $5,655/68.

''Momentum is still with us and $5,700 and $6,300 are our numbers for upside. We have seen good buying from trend followers,'' another dealer said.

Investment funds have flocked into industrial and precious metals and oil products as well as other commodities as the complex has outperformed traditional financial assets, such as equities and treasuries.

The second quarter of the year is traditionally the peak demand period for industrial metals. On the London Metal Exchange (LME), the world's largest non-ferrous metals market, warehouse inventories of all metals fell on Wednesday.

''This, and ongoing concerns over supply are likely to underpin prices, so unless some external event upsets the funds, the upward trends are likely to keep prices on the rise,'' BaseMetals.com analyst William Adams said.

ZINC SOARS Zinc , used as an anti-corrosive coating in galvanised steel production, hit a new high of $2,801.50 before settling at $2,792, up from a previous $2,690.

LME zinc stocks fell another 2,675 tonnes to 276,325, a fresh low since June 2001. At the end of last year, LME zinc stocks were just below 400,000 tonnes.

''With zinc it is difficult to fully account for the fall in stocks,'' Sempra Metals economist John Kemp said.

''There is certainly an increase in usage, but the drawdowns are also helped by former Eastern-bloc countries exporting less.'' He added that withdrawals of stock from LME warehouses by merchants was adding to pressure on inventories.

''Market deficits will sustain upside price moves through 2007. Zinc is catching up -- it was the laggard,'' Michael Lewis, global head of commodities research at Deutsche Bank said at a seminar this week.

Zinc has now risen 44 percent this year due to a shortage of zinc concentrates (ore) amid growing demand, and the metal is seen by many as being the stand-out performer this year.

Other metals also rose. Nickel was 3.2 percent higher at $16,350/16,400 and fund interest in the metal used in stainless re-awakened, with market looking like demand may outweigh supply.

According to Reuters Metal Production Database (http://mpd.session.rservices.com) nickel mine production in 2005 was seen at 1.37 million tonnes. Refined production is estimated at 1.29 million, while analysts see refined consumption between 1.3 and 1.4 million tonnes.

The high metal prices also boosted mining equities.

Merrill Lynch raised price targets for Rio Tinto , up 2.76 percent, and BHP Billiton was 1.6 percent higher and the bank reiterated its buy recommendation. [ID:nWNA7497] REUTERS CS BS2044 ,801.50 before settling at LONDON, Apr 5 (Reuters) Copper and zinc charged to new record highs on Wednesday as fund appetite for base metals returned after a bout of selling on Tuesday, dealers said.

Investment interest was the main driver as speculative investors took advantage of Tuesday's momentary weakness to pick up metal at bargain prices and add to positions.

''There is a continuation of the buy-the-dips strategy, but now some smaller speculative types, who have been more cautious, are moving back in on the long side,'' a trader said.

''These guys tend to panic more easily when prices slip and will liquidate their longs -- that is what happened yesterday, I think, and it will set the pattern for the next weeks or months.'' Copper , which fell 1.3 percent on Tuesday to $5,542, bounced smartly to trade at $5,685, a new peak on Wednesday. By 1217 GMT it had settled at $5,655/68.

''Momentum is still with us and $5,700 and $6,300 are our numbers for upside. We have seen good buying from trend followers,'' another dealer said.

Investment funds have flocked into industrial and precious metals and oil products as well as other commodities as the complex has outperformed traditional financial assets, such as equities and treasuries.

The second quarter of the year is traditionally the peak demand period for industrial metals. On the London Metal Exchange (LME), the world's largest non-ferrous metals market, warehouse inventories of all metals fell on Wednesday.

''This, and ongoing concerns over supply are likely to underpin prices, so unless some external event upsets the funds, the upward trends are likely to keep prices on the rise,'' BaseMetals.com analyst William Adams said.

ZINC SOARS Zinc , used as an anti-corrosive coating in galvanised steel production, hit a new high of $2,801.50 before settling at $2,792, up from a previous $2,690.

LME zinc stocks fell another 2,675 tonnes to 276,325, a fresh low since June 2001. At the end of last year, LME zinc stocks were just below 400,000 tonnes.

''With zinc it is difficult to fully account for the fall in stocks,'' Sempra Metals economist John Kemp said.

''There is certainly an increase in usage, but the drawdowns are also helped by former Eastern-bloc countries exporting less.'' He added that withdrawals of stock from LME warehouses by merchants was adding to pressure on inventories.

''Market deficits will sustain upside price moves through 2007. Zinc is catching up -- it was the laggard,'' Michael Lewis, global head of commodities research at Deutsche Bank said at a seminar this week.

Zinc has now risen 44 percent this year due to a shortage of zinc concentrates (ore) amid growing demand, and the metal is seen by many as being the stand-out performer this year.

Other metals also rose. Nickel was 3.2 percent higher at $16,350/16,400 and fund interest in the metal used in stainless re-awakened, with market looking like demand may outweigh supply.

According to Reuters Metal Production Database (http://mpd.session.rservices.com) nickel mine production in 2005 was seen at 1.37 million tonnes. Refined production is estimated at 1.29 million, while analysts see refined consumption between 1.3 and 1.4 million tonnes.

The high metal prices also boosted mining equities.

Merrill Lynch raised price targets for Rio Tinto , up 2.76 percent, and BHP Billiton was 1.6 percent higher and the bank reiterated its buy recommendation. [ID:nWNA7497] REUTERS CS BS2044 ,792, up from a previous LONDON, Apr 5 (Reuters) Copper and zinc charged to new record highs on Wednesday as fund appetite for base metals returned after a bout of selling on Tuesday, dealers said.

Investment interest was the main driver as speculative investors took advantage of Tuesday's momentary weakness to pick up metal at bargain prices and add to positions.

''There is a continuation of the buy-the-dips strategy, but now some smaller speculative types, who have been more cautious, are moving back in on the long side,'' a trader said.

''These guys tend to panic more easily when prices slip and will liquidate their longs -- that is what happened yesterday, I think, and it will set the pattern for the next weeks or months.'' Copper , which fell 1.3 percent on Tuesday to $5,542, bounced smartly to trade at $5,685, a new peak on Wednesday. By 1217 GMT it had settled at $5,655/68.

''Momentum is still with us and $5,700 and $6,300 are our numbers for upside. We have seen good buying from trend followers,'' another dealer said.

Investment funds have flocked into industrial and precious metals and oil products as well as other commodities as the complex has outperformed traditional financial assets, such as equities and treasuries.

The second quarter of the year is traditionally the peak demand period for industrial metals. On the London Metal Exchange (LME), the world's largest non-ferrous metals market, warehouse inventories of all metals fell on Wednesday.

''This, and ongoing concerns over supply are likely to underpin prices, so unless some external event upsets the funds, the upward trends are likely to keep prices on the rise,'' BaseMetals.com analyst William Adams said.

ZINC SOARS Zinc , used as an anti-corrosive coating in galvanised steel production, hit a new high of $2,801.50 before settling at $2,792, up from a previous $2,690.

LME zinc stocks fell another 2,675 tonnes to 276,325, a fresh low since June 2001. At the end of last year, LME zinc stocks were just below 400,000 tonnes.

''With zinc it is difficult to fully account for the fall in stocks,'' Sempra Metals economist John Kemp said.

''There is certainly an increase in usage, but the drawdowns are also helped by former Eastern-bloc countries exporting less.'' He added that withdrawals of stock from LME warehouses by merchants was adding to pressure on inventories.

''Market deficits will sustain upside price moves through 2007. Zinc is catching up -- it was the laggard,'' Michael Lewis, global head of commodities research at Deutsche Bank said at a seminar this week.

Zinc has now risen 44 percent this year due to a shortage of zinc concentrates (ore) amid growing demand, and the metal is seen by many as being the stand-out performer this year.

Other metals also rose. Nickel was 3.2 percent higher at $16,350/16,400 and fund interest in the metal used in stainless re-awakened, with market looking like demand may outweigh supply.

According to Reuters Metal Production Database (http://mpd.session.rservices.com) nickel mine production in 2005 was seen at 1.37 million tonnes. Refined production is estimated at 1.29 million, while analysts see refined consumption between 1.3 and 1.4 million tonnes.

The high metal prices also boosted mining equities.

Merrill Lynch raised price targets for Rio Tinto , up 2.76 percent, and BHP Billiton was 1.6 percent higher and the bank reiterated its buy recommendation. [ID:nWNA7497] REUTERS CS BS2044 ,690.

LME zinc stocks fell another 2,675 tonnes to 276,325, a fresh low since June 2001. At the end of last year, LME zinc stocks were just below 400,000 tonnes.

''With zinc it is difficult to fully account for the fall in stocks,'' Sempra Metals economist John Kemp said.

''There is certainly an increase in usage, but the drawdowns are also helped by former Eastern-bloc countries exporting less.'' He added that withdrawals of stock from LME warehouses by merchants was adding to pressure on inventories.

''Market deficits will sustain upside price moves through 2007. Zinc is catching up -- it was the laggard,'' Michael Lewis, global head of commodities research at Deutsche Bank said at a seminar this week.

Zinc has now risen 44 percent this year due to a shortage of zinc concentrates (ore) amid growing demand, and the metal is seen by many as being the stand-out performer this year.

Other metals also rose. Nickel was 3.2 percent higher at ,350/16,400 and fund interest in the metal used in stainless re-awakened, with market looking like demand may outweigh supply.

According to Reuters Metal Production Database (http://mpd.session.rservices.com) nickel mine production in 2005 was seen at 1.37 million tonnes. Refined production is estimated at 1.29 million, while analysts see refined consumption between 1.3 and 1.4 million tonnes.

The high metal prices also boosted mining equities.

Merrill Lynch raised price targets for Rio Tinto , up 2.76 percent, and BHP Billiton was 1.6 percent higher and the bank reiterated its buy recommendation. [ID:nWNA7497] REUTERS CS BS2044

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