Zinc Stalls Near $1400, Nickel Jumps

Upward impetus in base metal markets stalled by mid-session on the LME on Friday, with most dipping into the minus column, although zinc and nickel remained higher.

Traders said zinc was assisted up to a fresh 4-3/4 year high of $1,396 by follow-through speculative buying, but stalled near the crucial $1,400 level.

"It has gone too far too quick. It has got overbought and a bit extended," analyst Robin Bhar of LME trader Brandeis said. Above $1,400, prices will be at their highest since

October 1990, with the next chart objective around $1,435.

But the market appears to have run ahead of fundamentals, as stock drawdowns are flattening out and there is the ever-present threat of Chinese deliveries into Singapore, Bhar noted.

Prices concluded the kerb at $1,396 a tonne, up $3 from Thursday's kerb close.

Nickel sprang into life during the latter part of the morning, chasing above $7,200 and triggering some buy-stops, traders said.

The catalyst for the move was pessimism about a speedy resolution in the current Inco stoppage. Union officials at

Sudbury said they do not expect developments until after the July maintenance closure. Prices finished the kerb at $7,250, up $90 a tonne from yesterday, and well above an early low of $7,130.

Copper prices again turned tail on the approach towards $2,600 despite a further hardening in the cash/threes spread backwardation to near $140.

Until the market breaks out of a $2,560/2,610 band business will be low-key, although there is the threat of tightness in July/August worsening. Last kerb trade was at $2,581, down $4.50.