Another good day for MCR today, before some likely profit taking...

Another good day for MCR today, before some likely profit taking late this afternoon and tomorrow?

Base metals steady, nickel and tin near highs
Tue Jan 23, 2007 8:48 AM GMT


By Nick Trevethan
SHANGHAI (Reuters) - Base metals prices in London
and Shanghai were steady on Tuesday, with nickel and tin just
shy of record levels, supported by supply worries.
Nickel for delivery in three months on the London Metal
Exchange was at $37,050 a tonne at 0433 GMT, versus the record
high at Monday's close of $37,300, when the market rallied 2.8
percent.
Tin was $11,600, down $190 from the previous close. Earlier
on Monday, tin matched its all-time high of $11,850 recorded on
December 29.
"It is difficult to say whether prices can continue at
these levels. Fundamentals support strong prices, but whether
they support prices at these levels is debatable," an LME
dealer said.
"But there is very little metal around and if you are are
short you have to buy regardless of the price. You don't have
any other option."
Available stocks of nickel in LME warehouses stand at
around 4,000 tonnes, little more than one day's global
consumption and down from around 36,000 tonnes at the start of
2006. In the same period, prices have jumped 170 percent.
Tin stocks are running at 12,520 tonnes, down from 16,725
tonnes at the start of 2006. Uncertainty about the operation of
independent smelters in Indonesia and a switch to tin-based
solders from lead-based, have supported prices.
But industry officials warned that if prices, especially
those of nickel, continued at high levels, demand would ease.
"Higher nickel prices put pressure on production at
domestic stainless steel mills," a manager at a eastern
China-based stainless steel maker said.
"In my opinion, the mills which produce both stainless
steel and carbon steel may shift some capacity from stainless
to carbon steel, or from 300-series stainless steel to 400 and
200-series, which consume less nickel," he added.
Chinese stainless producers sell metal on an outright
basis, which does not take into account day-to-day movements in
nickel prices, unlike Western steel makers who make an alloy
surcharge to reflect changing prices.
He said nickel accounted for more than 85 percent of the
cost of production of 300-series stainless steel, up from 60
percent a year ago.
Shanghai copper futures were steady, with the most active
March contract up 40 yuan at 52,590 yuan a tonne by
the midday break on Tuesday.
Spot copper prices in Shanghai were up 390 yuan, quoted
between 55,700 yuan and 55,900 yuan.
LME copper futures were $15 lower at $5,605 a tonne.
"The key for copper this year is not the demand story.
There is a chance for restocking, in China and elsewhere in the
world, but the crucial thing will be supply," ABN AMRO
commodities analyst Nick Moore said.
"Five years into the boom and producers are in a position
to maximise, rather than optimise, output."
Moore pointed to latest data from the International Copper
Study Group showing there was a sharp rise in mine capacity
utilisation to 92.7 percent in October from 84.2 percent in
September.
"This very sharp acceleration in one month of 8.5
percentage points is a harbinger of the supply surge that we
expect and a major shift to surplus."
On Monday, global LME stocks stood at 193,450 tonnes,
almost double from the start of 2006.
The most traded April Shanghai aluminium futures rose to
19,500 yuan from 19,400 yuan. LME aluminium ticked down $2 to
$2,758.
"Aluminium now seems to be on a slow-paced climb despite
the 825-tonne influx of stocks into LME warehouses," Standard
Bank London said in a report.
"The continuing tightness keeping the cash-to-three-months
backwardation at near decade record levels shows no sign of
easing and indeed Feb-March is continuing to tighten, meaning
that this tightness could last at least until March."
Premiums for LME cash metal above the three-month price
were $105/125, near their highest since 1990, and up from $30
at the start of 2007.