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 Posted - 06/10/2008 : 19:12:20
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Strong dollar weighs on copper, nickel jumps 6.7 pct
06.10.08, 12:23 PM ET
China - (Updates prices, adds comments)
By Humeyra Pamuk and Anna Stablum
LONDON, June 10 (Reuters) - A strong dollar knocked copper prices lower on Tuesday, while nickel jumped almost 7 percent as a gas explosion in Australia raised concerns over this year's output, traders and analysts said.
In other metals, zinc fell to a 2-1/2-year low on poor fundamentals with a market surplus expected this year and tin shed more than 4 percent on technical selling.
Copper for three-months delivery on the London Metal Exchange ended at $7,870 per tonne, down 1.4 percent from the last quote of $7,980/7,985 on Monday.
In New York, copper for July delivery was trading down 5.30 cents to $3.5600 a pound by 1558 GMT.
Copper has been depressed since touching a record of $8,880 per tonne in mid-April, with the market focusing on movements in currency markets in the absence of any fresh impetus.
"When we're talking about short term, it's entirely a dollar story," said Gary Mead, senior commodities analyst at Virtual Metals. "A dollar story which is based really upon the remarks of Ben Bernanke."
The dollar set a 3-1/2-month high against the yen on Tuesday after Federal Reserve Chairman Ben Bernanke raised his anti-inflationary language, stoking expectations for U.S. interest rate rises.
A firm dollar makes industrial metals more expensive for other currency holders.
Nickel rose 6.7 percent to touch an intraday high of $23,420 before ending at $23,390, up $1,440, with possible production losses prompting a short covering rally.
Australian miners Minara Resources Ltd and Newcrest Mining Ltd said a gas outage after last week's explosion at a supplier's plant will impact their full-year production forecasts.
Stocks in LME warehouses are down by almost 10 percent since the start of May, but at the same time stainless steel demand -- 70 percent of nickel's offtake goes to this market -- has eased.
"While the ongoing trend of LME stock outflows and reduced output at Murrin Murrin are supportive, nickel prices remain weighed by a market surplus ... and subdued stainless steel demand," analyst Michael Jansen at JP Morgan said in a report.
TIN AND ZINC DROP
Zinc fell 3.9 percent to an intraday low of $1,905 a tonne -- its lowest level since early January 2006 -- and the metal has lost some 20 percent so far this year. It was last indicated at $1,934, down $49 or 2.5 percent on arbitrage-related selling and poor fundamentals.
"The metal had gone up in the last weeks because of the price difference between Shanghai and the LME, now it's evened out again ... Funds have been negative on that one for a while," an LME trader said.
Another trader said expectations of supply coming onstream in the next few years and lack of demand weighed on prices.
"There's plenty of it around," another LME trader said.
Tin fell 4.5 percent to $21,100 -- the lowest since April 16 -- before closing at $21,375, down $725 from Monday.
"Tin has repeatedly failed to breach an important resistance level of $22,012," analyst David Thurtell at BNP Paribas (other-otc: BNPQY.PK - news - people ) said, adding this had triggered some selling.
Physical tin traders said the metal had found a floor at around $20,000 to $21,000, with concerns about Indonesian exports underpinning the market.
Aluminium gained $3 to $2,955 per tonne and lead was higher at $1,965 versus $1,958/1,960. Metal Prices by 1554 GMT: Metal Last Change Percent Move End 2007 Ytd Percent
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