Lme Nickel Eases To $7,100

London Metal Exchange (LME) nickel eased from its highs in Tuesday's pre-market trading as an earlier knee-jerk reaction to a strike at Inco Sudbury found good volume selling from longs and investment funds, traders said.

News that Russian producer Norilsk aims to produce 213,000 tonnes of nickel in 1997, up 20 percent from the 1996 level of 177,185 tonnes helped to damage upside sentiment in a market that was already on the turn.

Three months delivery was last at $7,100 a tonne, down on its peak of $7,330 but up $75 from Monday's LME close.

The union representing workers at Inco Sudbury said its members voted 60.4 percent to reject a tentative contract agreement. According to Inco's production plan for the current fiscal year, the Ontario division was expected to produce around 230 million pounds of nickel, about 200 million pounds of copper and near four million pounds of cobalt.

LME traders said the rally this morning followed brisk buying out of the Far East, but they doubted that the market would move above its earlier peak.

"Two or three nervous shorts covered, though there is little in the way of further covering to be done," one trader commented.

Despite nickel's recent oversold condition, several traders suggested prices would soon resume a downward track given the availability of stock and bearish chart signals.

Elsewhere, copper moved higher to find resistance at around $2,500.

But traders are expecting copper to drift back in the near term on the approach of the seasonally slow quarter for demand.

"Inco has offered some support but with the market failing to overcome $2,500 I would expect prices to drift lower," one trader said.

Traders were eyeing levels towards $2,440/45. Last business was at $2,495, up $10.

A further inventory fall helped to lift aluminium above $1,600, but traders believed prices would struggle to overcome $1,610.

"I expect the range for the remainder of pre-market trading to hold between $1,595 and $1,610," a trader said. Aluminium was last at $1,606, versus $1,596.

Light Chinese buying underpinned lead, which was last at $626, unchanged.

Zinc clawed higher to $1,334, a gain of $4, on the back of trade interest and a small fall in stocks

Tin was unmoved at $5,640, while alloy was quoted at $1,480/90, against Monday's close of $1,480/85.