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Base metal prices higher on lme

LONDON: Copper prices soared to seven-month highs in active trade on the London Metal Exchange (LME) Thursday, pulling the rest of the complex higher with it.

Nickel posted six-month highs and tin registered a near-six-year peak.

The red metal surged to a high of $3,063 a tonne before easing slightly. The red metal ended the afternoon kerb trading session at $3,057, still up $52 from Wednesday's close.

A combination of fund investment, options-related buying and trade shortcovering helped launch the market. Copper has put on $118, or four percent from the lows to highs so far this week.

Traders and analysts said growing confidence in the world's major economies encouraged investment fund buying this week.

Consumers and some producers have been forced to cover short positions at higher prices. Many expected prices to drift lower during the slow demand period in July and August, but rallies in all metals appear to have caught many off guard.

Traders expect copper to rise further as tightness intensifies during the run up to the key October month.

Several forecast cash copper to rise to $3,500 to $4,000 in the medium term. Cash moved to an $80 premium over three month values, well up on Wednesday but off the highs.

September/three months moved in today from $100 backwardation (prompt premium) early on to $90 near the close, and October/threes from $90 to $80.

"We have had a very good run up with no downside correction yet. It has got to come at some time," one trader commented.

He said light Far Eastern selling had already emerged on tin and aluminium, and may spread to other base metals on Friday.

Copper's next upside target is the 1995 of $3,081.

Tin hit a near six-year peak, boosted by small volume chart-based buying from investment funds. Prices rose to a $7,310 high before closing at $7,270, up $200.

Nickel rose to its highest level for more than six months of $9,325. It finished $160 higher at $9,310.

Aluminium was actively traded, but failed to match copper's performance. Strong technical resistance around $1,950 held the market in check for most of the day before upward pressure finally saw it cleared.

Physical activity remains very slow, and stocks have accumulated in the Far East, easing the need for buying from that region. Aluminium still finished $18.5 higher at $1,956.5.

Until the market clears stiff overhead resistance at $1,973/75 traders remain cautious about its upside potential.

Lead and zinc rallied in the wake of copper.

Lead gained $15 to end at $649. It is still well below the 1995 high of $713. Zinc rose $12 to $1,063.

Alloy was quiet, last quoted at $1,750/60 against $1,750 at the close Wednesday.-Reuter