Copper, zinc, nickel surge on fund buying: LME Source: Dow Jones
London Metal Exchange prices posted a massive surge to multi-record highs Friday, with copper prices rebounding as much as 7.8% and zinc by 9.1% on the day as funds and speculators returned to the market, traders said.
However, the market's volatility over the past two trading days saw many players move to the sidelines, so that the upside surge was built on brittle volumes, traders said.
Market participants had expected a period of consolidation following Thursday's downward correction.
LME three-month copper quickly moved from a sideways trading pattern at around $6,320 a metric ton back to buoyant conditions, rising to a fresh record high of $6,630/ton by midday.
LME stock drawdowns in many metals started the move, traders said.
LME nickel also posted a fresh record high of $19,200/ton, as prices moving towards the $19,000/ton level triggered momentum fund buying, traders said.
Price rises accelerated in the afternoon amid renewed fund and speculative buying interest, resulting in swift gains on copper and zinc to new record highs of $6,785/ton and $3,355/ton respectively, while nickel also raced to fresh highs of $19,500/ton.
Friday's strong close points to further gains next week, while traders expect more volatile moves and wide price ranges to "increasingly become the norm," a trader said.
A perception of tighter-than-expected market fundamentals for copper is also gaining momentum, attracting more funds to the market, Barclays Capital base metals analyst Ingrid Sternby said.
"The market seems to be accepting more and more that copper's fundamentals are very strong and supply won't be responding very quickly to higher prices," she said.
3 months metal (prices in dollars a ton) Bid – Ask, Change from Thursday PM kerb
Copper 6779.00-6780.00, Up 483.00 Lead 1250.00-1252.00, Up 70.00 Zinc 3310.00-3315.00, Up 235.00 Aluminium 2778.00-2779.00, Up 133.00 Nickel 19350.00-19450.00, Up 900.00 Tin 9100.00-9125.00, Up 150.00
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