Home »Agriculture and Allied » World » Zinc hits eight-year peak

Renewed speculative buying drove most base metals higher during late Tuesday trading on the London Metal Exchange (LME), with copper hurdling back above $3,900 a tonne and zinc setting a new eight-year peak.

Traders said conditions were thin at times, resulting in continued jumpy trading, particularly in copper, where the day's range was over $100 for the third successive session.

"It is very volatile still, and until it settles down into a more normal pattern we will see moves like this for some time to come," a trader said.

Copper traded between $3,923.50 and $3,810 on Monday, one session after the metal fell as low as $3,752, over six percent off Thursday's record high of $4,018.

Price moves are also being exacerbated by option-related trading, with delta-hedging operations seen ahead of next Wednesday's November option expires.

Copper cleared the $3,900 level, triggering short covering, fund buying and buy-stops up to a peak of $3,955. Last trade was at $3,945, up from the Monday close of $3,856, after business between $3,835 and $3,955. Copper may well touch new highs despite a weaker short-term technical outlook.

"We hear that underlying demand remains strong, although many consumers in Asia are sidelined, using up their stocks and only buy on price dips," Barclays Capital analyst Ingrid Sternby said.

Zinc rose to new eight-year highs, spurred by speculative fund buying and tightening supplies.

"It got above $1,500 and there were buy-stops there and the stock fall helped," one said.

LME warehouse inventories fell 3,550 tonnes to 496,550 tonnes. Of this, 246,475 tonnes are in storm-ravaged New Orleans, and cannot be removed easily.

Prices rose $44, or 2.9 percent, to $1,529 at one point from $1,485 at Monday's close before ending at $1,520.

Analysts said zinc's bounce was aided by recent supply-side developments.

Australian miner CBH Resources Ltd on Monday suspended operations at its Endeavour mine and declared force majeure on concentrate deliveries that it was unable to meet from stockpiles.

Lead rose to $979 from $965 and was looking to challenge resistance up to $1,000.

Aluminium cleared $1,950 again and ran up to $1,964 from Monday's close of $1,937.00.

However, nickel lost $125 at $11,750, under pressure from rising stocks and downbeat fundamentals. Stocks rose 432 tonne to 17,172 tonnes, the highest since January 2005. Tin was at $6,175/6,200 from $6,200/6,250.

Copyright Reuters, 2005


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