Sarlock
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Ni, Co, Cu, PGM, Au Properties in Ontario Canada
Producing Mines and "state-of-the-art" Mill
Message: Sarlock
Another post relating to the gas explosion that others have mentioned but its nice to see the additional commentary
Nickel soars nearly 7pc on the LME on Varanus fallout
June 11, 2008
A STRONG US dollar knocked copper prices lower, while nickel jumped almost 7 per cent as a gas explosion in Australia raised concerns over this year's output.
In other metals, zinc fell to a two-and-a-half-year low on poor fundamentals with a market surplus expected this year, and tin shed more than 4 per cent on technical selling.
Copper for three-months delivery on the London Metal Exchange ended at $US7870 per tonne, down 1.4 per cent from the last quote of $US7980/7985 on Monday.
In New York, copper for July delivery settled down US5.30c at $3.56 a pound at the New York Mercantile Exchange's COMEX division.
“When we're talking about short term, it's entirely a dollar story,” said Gary Mead, senior commodities analyst at Virtual Metals. “A dollar story which is based really upon the remarks of Ben Bernanke.”
The dollar set a 3-and-a-half-month high against the yen yesterday after Federal Reserve chairman Bernanke raised his anti-inflationary language, stoking expectations for US interest rate rises.
A firm US dollar makes industrial metals more expensive for other currency holders.
Copper has been depressed since touching a record of $US8880 per tonne in mid-April on the LME and $US4.26 a pound in early May in New York, with the market more focused on movements in currency markets due to the absence of any fresh impetus.
“We have kind of reversed the trend we had at the beginning of the year,” said Rob Kurzatkowski, futures analyst with Chicago-based OptionExpress, referring to a recent levelling-off of warehouse stock drawdowns, less of a Chinese presence, and a quieter tone on the labour front.
“None of these wild cards have really come into play to spark a rally,” he said.
Later in the session, news hit that workers at Freeport-McMoRan's Peruvian copper pit Cerro Verde walked off the job. This follows a Friday announcement from Peru's largest federation of mining unions that a nationwide strike will begin on June 30.
Meanwhile, nickel rose 6.7 per cent to touch an intraday high of $23,420 before ending at $US23,390, up $US1440, with possible production losses prompting a short covering rally.
Australian miners Minara Resources and Newcrest Mining said a gas outage after last week's explosion at a supplier's plant at Varanus in West Australia will impact their full-year production forecasts.
Stocks in LME warehouses are down by almost 10 per cent since the start of May, but at the same time stainless steel demand -- 70 per cent of nickel's offtake goes to this market -- has eased.
“While the ongoing trend of LME stock outflows and reduced output at Murrin Murrin are supportive, nickel prices remain weighed by a market surplus ... and subdued stainless steel demand,” analyst Michael Jansen at JP Morgan said in a report.
Zinc fell 3.9 per cent to an intraday low of $US1905 a tonne -- its lowest level since early January 2006 -- and the metal has lost some 20 per cent so far this year.
It was last indicated at $US1934, down $US49 or 2.5 per cent on arbitrage-related selling and poor fundamentals.
“The metal had gone up in the last weeks because of the price difference between Shanghai and the LME, now it's evened out again ... Funds have been negative on that one for a while,” an LME trader said.
Another trader said expectations of supply coming on stream in the next few years and lack of demand weighed on prices.
“There's plenty of it around,” another LME trader said.
Tin fell 4.5 per cent to $US21,100 -- the lowest since April 16 -- before closing at $US21,375, down $US725 from Monday.
“Tin has repeatedly failed to breach an important resistance level of $22,012,” analyst David Thurtell at BNP Paribas said, adding this had triggered some selling.
Physical tin traders said the metal had found a floor at around $US20,000 to $US21,000, with concerns about Indonesian exports underpinning the market.
Aluminium gained $US3 to $US2955 per tonne and lead was higher at $US1965 versus $US1958/1960.
Reuters
Copper for three-months delivery on the London Metal Exchange ended at $US7870 per tonne, down 1.4 per cent from the last quote of $US7980/7985 on Monday.
In New York, copper for July delivery settled down US5.30c at $3.56 a pound at the New York Mercantile Exchange's COMEX division.
“When we're talking about short term, it's entirely a dollar story,” said Gary Mead, senior commodities analyst at Virtual Metals. “A dollar story which is based really upon the remarks of Ben Bernanke.”
The dollar set a 3-and-a-half-month high against the yen yesterday after Federal Reserve chairman Bernanke raised his anti-inflationary language, stoking expectations for US interest rate rises.
A firm US dollar makes industrial metals more expensive for other currency holders.
Copper has been depressed since touching a record of $US8880 per tonne in mid-April on the LME and $US4.26 a pound in early May in New York, with the market more focused on movements in currency markets due to the absence of any fresh impetus.
“We have kind of reversed the trend we had at the beginning of the year,” said Rob Kurzatkowski, futures analyst with Chicago-based OptionExpress, referring to a recent levelling-off of warehouse stock drawdowns, less of a Chinese presence, and a quieter tone on the labour front.
“None of these wild cards have really come into play to spark a rally,” he said.
Later in the session, news hit that workers at Freeport-McMoRan's Peruvian copper pit Cerro Verde walked off the job. This follows a Friday announcement from Peru's largest federation of mining unions that a nationwide strike will begin on June 30.
Meanwhile, nickel rose 6.7 per cent to touch an intraday high of $23,420 before ending at $US23,390, up $US1440, with possible production losses prompting a short covering rally.
Australian miners Minara Resources and Newcrest Mining said a gas outage after last week's explosion at a supplier's plant at Varanus in West Australia will impact their full-year production forecasts.
Stocks in LME warehouses are down by almost 10 per cent since the start of May, but at the same time stainless steel demand -- 70 per cent of nickel's offtake goes to this market -- has eased.
“While the ongoing trend of LME stock outflows and reduced output at Murrin Murrin are supportive, nickel prices remain weighed by a market surplus ... and subdued stainless steel demand,” analyst Michael Jansen at JP Morgan said in a report.
Zinc fell 3.9 per cent to an intraday low of $US1905 a tonne -- its lowest level since early January 2006 -- and the metal has lost some 20 per cent so far this year.
It was last indicated at $US1934, down $US49 or 2.5 per cent on arbitrage-related selling and poor fundamentals.
“The metal had gone up in the last weeks because of the price difference between Shanghai and the LME, now it's evened out again ... Funds have been negative on that one for a while,” an LME trader said.
Another trader said expectations of supply coming on stream in the next few years and lack of demand weighed on prices.
“There's plenty of it around,” another LME trader said.
Tin fell 4.5 per cent to $US21,100 -- the lowest since April 16 -- before closing at $US21,375, down $US725 from Monday.
“Tin has repeatedly failed to breach an important resistance level of $22,012,” analyst David Thurtell at BNP Paribas said, adding this had triggered some selling.
Physical tin traders said the metal had found a floor at around $US20,000 to $US21,000, with concerns about Indonesian exports underpinning the market.
Aluminium gained $US3 to $US2955 per tonne and lead was higher at $US1965 versus $US1958/1960.
Reuters
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