Zinc Skips Past $1,300 In Slow Lme Trade Trade

Base metal business got off to a slow start on the LME on Tuesday after the long Easter holiday, with only zinc seeing reasonable interest, traders said. Zinc prices raced higher from $1,291 up to $1,305 a tonne, before settling at $1,304, up $9 from Thursdays kerb close.

A 13,025-tonne LME warehouse stock decline helped the rise, although the market was already on the move prior to the data.

Traders said the market had recovered well from the sell-off seen last week, which had possibly been engineered to shake out some of the weeker longs. Prices are now in better shape technically, and should re-test the recent $1,307 high, they said.

 

Elsewhere, copper prices probed towards the $2,380 level on the charts - a break above that could see the market run up towards $2,400. But business was slow, while the 6,225-tonne stock fall was not as large as some recent talk had suggested.

Three months settled back around $2,375, up just $3 from pre-weekend levels. Aluminium was dull, with the market unable to build on the rally away from the $1,300 level last week. The 2,525-tonne stock decline was marginally supportive, and prices held at a steady $1,644/47.

Nickel edged back above the $7,800 level, and was $15 steadier at $7,820. Lead and tin were quiet and holding at $686/88 and $5,885/5,905 a tonne, both relatively steady. Alloy was indicated at $1,535/45 a tonne.

Meanwhile, Far East metals traders expected copper and aluminium stocks on the LME to fall on Tuesday. Copper stocks were tipped to drop by 7,000-10,000 tonnes, and aluminium by 8,000 to 10,000 tonnes, one trading source in Singapore said.

Chinese buying, although long expected, was not necessarily behind the expected drop in LME copper stocks, he and other traders in the region said.

Chinese buying has been expected to emerge for so long that many traders said they had given up waiting, and now saw China starting its import programme once the winter ended and construction returned to full swing in late April/early May. LME zinc stocks were expected to rise, traders said, by 8,000 to 10,000 tonnes.

Trading sources in China, Hong Kong and Singapore have said Chinese zinc is moving to Singapore warehouses so producers can take advantage of high world prices, now hovering around 4-1/2-year highs of $1,300 a tonne.

Traders have estimated Chinese zinc tonnages on the way to Singapore at 20,000 to 25,000 tonnes.

China is known to move zinc metal to Singapore to use as collateral for loans, so it does not necessarily show up on warrants.

Nickel stocks would also rise by about 800 tonnes, one trading source said.