Lme Copper Higher By Mid-Session, Finds Resistance

London Metal Exchange copper prices, on the back of widening nearby spreads made an upside move by the morning close but traders doubted the market would climb much further after it found resistance near $2,425 a tonne.

Nickel prices failed to show any serious reaction to news that union negotiators at Canada's Inco Ltd had endorsed a contract deal to end a four-week strike. The spike in copper helped to underpin the market.

Borrowing of copper's cash to threes saw the spread widen to around a $150 backwardation, against $130 on Thursday. Traders said despite another small stocks rise the market remains physically tight. Last three months business was at $2,418, up on Thursday's LME kerb close of $2,398.

 

Traders said they expected a period of consolidation but did not rule out volatile trading later. Several traders suggested the copper could retreat to recent seven-week lows of $2,355, while others argued that a break above resistance at $2,415 could spark sharp gains.

Referring to nickel, one trader said, "The market has failed to move on the Inco news which was largely factored in." Last three months business was at $7,050 a $20 loss from Thursday's LME kerb close.

The union at Inco's Sudbury, Ontario plant, said a ratification vote on the deal would be held on Saturday. Results of the vote would be announced late that afternoon.

According to Inco's production plan, the Ontario division was expected to produce 230 million pounds of nickel and 200 million pounds of copper this year.

Traders said nickel was finding support from an LME stocks fall but added that its next move largely depended on the gyrations of the copper market.

Another stocks fall initially helped to underpin aluminium but prices sagged under speculative selling to settle at $1,568, down $9.

Forward selling helped to cap the recent uptrending zinc market which was last at $1,412, unchanged. On Thursday zinc prices charged to a seven-year high of $1,420. Lead was $3 up at $624, while tin was up $20 at $5,570. Alloy was quoted at $1,450/60, against $1,460/70.