lme zinc revs to new high: others stagnate

LME zinc revs to new high, others stagnate
Tue Nov 7, 2006 5:16 PM GMT
Printer Friendly

By Clare Black
LONDON (Reuters) - London Metal Exchange zinc futures extended their advance on Tuesday, hitting a fresh record high of $4,500 a tonne as short supplies and strong demand prompted funds to snap up a metal that is now up 136 percent so far this year.

Sister metal lead also hit a new all-time peak, but the
larger markets like copper and aluminium were little changed.
Traders said turnover remained relatively low, although
activity on the LME's open outcry floor picked up after the exchange's electronic trading system Select went down again for the second day running due to an ongoing technical glitch.

Zinc for delivery in three months traded at $4,480 a
tonne in the second open outcry session, up two percent.
Rapidly declining stocks and healthy demand for the metal, used mainly to coat steel to protect from rusting, have attracted funds to speculate on further gains.
"It is now momentum driven," a senior LME trader said. "This immediate upward move, which we're still in the grips of, could elevate us closer to that number."
"If that immediate momentum stops, it could come back down quite a bit. But at the moment the elastic band is still being stretched."
Floor traders said buying was coming mainly from short-term funds, like CTAs (commodity trading advisors) and only in smallish volumes.
Lead also hit new highs, trading at $1,740 and was
quoted in open outcry trade at $1,738 a tonne, up from Monday's
$1,738.

APATHY ELSEWHERE
Copper was content to sit in its well-trodden $7,000 to
$8,000 range, gaining a bit more pace during open outcry trade.
It took little notice of the first drop in warehouse inventories in nearly three weeks.
Three months futures traded $55 firmer at $7,415 a
tonne. Prices rocketed up to an all-time peak of $8,800 earlier in the year as supplies fell to critically low levels.
"Copper is still within a broad range, with some buying
coming in when prices dip under $7,400, around $7,380," a floor trader said.
Aluminium rose $5 to $2,805 a tonne. Since late
October, LME aluminium futures have seen resistance just above $2,800 a tonne, capping gains for the year at 23 percent, the poorest performance of the LME base metal contracts.
Dealers reported trade selling above $2,810, but also noted
good demand and short-term supply tightness in Europe.
"So although there is a large dose of speculative interest involved at the moment, associated with options for nearby December, it is not entirely divorced from the fundamentals.
There is generally a friendly sentiment."

Nickel recouped some of the previous day's hefty
losses, gaining nearly two percent to $31,600. Tin was
untraded but indicated at $10,100/10,150 from $10,075/10,100".