Reuters Copper and nickel up on LME, Falconbridge strike Monday February 2, 5:14 am ET
LONDON, Feb 2 (Reuters) - Copper notched up fresh 6-1/2 year highs during Monday pre-market trading on the London Metal Exchange (LME), while nickel also rose, following the start of a strike at Canadian miner Falconbridge's Sudbury facility on Sunday, traders said. Other metals were also higher, such as lead, but the market was largely routine and little heavy trade was taking place. "Copper is leading the way, then lead, but there is not a lot of volume. Most people are long and happy to be so. The shorts are finding it difficult to get people to sell," one trader said. In the wider fundamental side, traders will be keeping an eye out for some manufacturing data due out from the United States later in the day. The Institute for Supply Management (ISM)'s January manufacturing index will be released at 1500 GMT, with a consensus forecast of 64.0, slightly down from the previous 66.2. FALCONBRIDGE STRIKE BOOSTS NICKEL The long-awaited countdown to the Falconbridge labour contract expiry ended on Sunday with a stoppage, as the company closed down mining and milling operations as workers at the facility producing five percent of the world's nickel went on strike after rejecting a new contract. The Sudbury smelter, which produced 57,900 tonnes of unrefined nickel in 2002, would be run at a reduced rate by a small number of non-union workers, Falconbridge spokesman Dale Coffin said. During the last strike at the unit, a six-month halt in 2000, the smelter was run at 50 percent to 60 percent capacity. No more negotiations were scheduled, but both sides said they were keen to start talking again after the union rejected a revised offer from Toronto-based Falconbridge on Saturday and the company refused to budge. "Undoubtedly, much of Friday's move was in anticipation of the announcement and those who went home long were happy to sell on the London opening, a move which has seen the price ease back," LME trader IFX Ltd said. Three months prices (MNI3) rose at one point above $16,000 a tonne in response to the news, which was not entirely unexpected, before settling back to $15,400/15,600, up $200 from Friday's kerb close. "That ($16,000-plus) was a bit of a knee-jerk reaction -- back here is the true price, really, the trader said. Technical tightness remained firmly entrenched, with the cash/threes spread trading at a $240 backwardation, versus Friday's $220 premium. Copper (MCU3) consolidated the overnight break above $2,500, indicated at $2,510/2,514, up $13 from Friday. "...overall gains are occurring against a background of tightening physical markets," Standard Bank's Robin Bhar said in a daily report. He said Friday's bullish close had opened the way for copper to target its next upside objective at $2,530 a tonne. Further resistance was pegged at $2,600. Lead (MPB3) rose on trade and speculative buying, which triggered buy-stops in the mid-$770s, to $782/785, a $13 gain. Profit-taking was seen around the highs, but the market remained firm, amid Chinese buying interest, IFX noted. In other metals aluminium (MAL3) was at $1,658/1,660, up $12, and looking to challenge the $1,700 level at some stage. "It is interesting to note that aluminium was largely driven by consumer forward buying (on Friday)," Martin Fewings, analyst with Mitsui Bussan, said in a report. "...and it appears that many have finally bit the bullet and committed (compared to earlier uncertainty over the outlook and direction of currencies)."
