Nickel Rises As Finnish Output Is Hit

Nickel prices leapt up from early 6-1/2 month lows during Mondays LME ring and kerb sessions as news of potential lost production at Outokumpu partially stiffened weak sentiment.

Other markets were broadly steadier, tending to follow copper which was whipped higher as spread tightness increased. However, business was not over-active. It has been an interesting morning but the volumes are not great. I think people are taking it easy ahead of July options (on Wednesday), one trader said.

The nickel market reacted to news that a weekend explosion at Outokumpus Harjavalta smelter would result in 5,000 tonnes of lost production. Copper output was interrupted only briefly. This helped the market partially recover from the Inco Sudbury settlement over the weekend. Prices had initially slumped to a low of $6,760 but by the end of the kerb were back at $6,890 still down $80 from Fridays kerb close. Inco had been going on for ages, so you could almost second-guess it. But this (Outokumpu) was unexpected, which is why it jumped up, another trader said. Copper business was at a trickle with most attention diverted towards the spreads.

Early borrowing of cash and July prompted the tick higher but subsequent lending against July took the steam out of the rally.

Also, copper concentrate shipments have been resumed at the OK Tedi mine in Papua New Guinea. But the main focus of attention in the early part of the week will be the July options declaration on Wednesday given the widespread talk over the activities of a Korean firm, traders added.

Last morning trade was at $2,429, an $11 gain from Friday. Cash/threes was around $155 backwardation, while July/threes was at $150.

Zinc briefly equaled Fridays 6-3/4 year high of $1,430 but was shaded by overhead resistance. Also, LME stocks rose by 1,875 tonnes, with 2,750 tonnes delivered into Singapore.

There has been talk of quality problems with some Chinese zinc which may be why recent talk of sizeable tonnages being delivered into Singapore has not yet been confirmed. Zinc ended the session at $1,425, down $3.

Aluminium attempted to push back up to $1,600, but was again constrained by expected technical sales as well as some cash pricing in the rings. Final trade was at $1,585, up $10.

Interest in other contracts was flat with tin and lead concluding the kerb at steady levels of $626/628 and $5,565/75 a tonne. Alloy was stable at $1,450.