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copper, zinc record highs; china, funds buy Copper, zinc record highs; China, funds buy
Source: Dow Jones 5/4/06

London Metal Exchange copper and zinc rallied to new record highs Wednesday as buoyant performance forced more short covering and attracted further fund investments, traders and analysts said.

LME three-month copper surged $5,710 a metric ton before the kerb after Chinese buying progressively moved copper prices up during the day, drawing in fund buyers amid continuing bullish sentiment, a trader said.

"We don't know if the Chinese were stopping out of a short as the market isn't going down or if this was fresh buying," the trader said.

LME inventory drawdowns see copper stocks fall to a five-week low of 113,925 tons.

In the news, the copper cathode shortages in the European market have forced temporary production stoppages at a number of large copper fabricators in Spain, France and Germany, industry sources said.

While fund demand drove prices sharply up before the kerb, copper's cash-to-three-month spread continues to contract, now moving to a fresh two-year low of $25.50 as lending pressure rose.

LME nickel prices caught up with the rest of the complex Wednesday, rising as much as 5.5% during the day following weeks of underperformance.

Concerns for the future of Inco Ltd.'s Goro project in New Caledonia fueled the initial break-out from a sideways trading pattern.

LME zinc raced to a high of $2,805/ton, up 4.3% after early speculative demand setting the tone. The spread remains in backwardation, trading at $6.

LME tin rose to one-year highs of $8,450/ton while lead bucked the trend to end in negative territory on profit taking.

3 months metal (prices in dollars a ton)
Bid – Ask, Change from Tuesday PM kerb

Copper 5710.00-5720.00, Up 162.00
Lead 1150.00-1155.00, Dn 9.00
Zinc 2787.00-2788.00, Up 97.00
Aluminium 2509.00-2510.00, Up 46.00
Nickel 16745.00-16755.00, Up 870.00
Tin 8350.00-8400.00, Up 75.00