The base metals were all strongly positive on Tuesday. Copper rose from the pre-dawn hours straight through the New York day, just edging below its intraday highs to finish at $1.5308/lb., up more than 10½ cents. Nickel peaked as New York opened, but only slipped a little during the day, closing at $5.8665/lb., up more than 23¾ cents.

Zinc had a decent day, ending at its intraday high of $0.581/lb., up better than a penny and a half. Aluminum pushed higher all day, ultimately adding 3¼ cents, to $0.719/lb., while lead shot straight up to its intraday high of $0.5398/lb., up 4 cents.

Copper led the industrial metals higher, soaring to a one-month high past the $1.50 mark as the new year buying momentum gathered some steam as economic stimulus optimism prevailed alongside the annual portfolio rebalancing by index funds.

“Metals could do somewhat better over the course of the week,” wrote Edward Meir, of MF Global (NYSE:MF). He noted that copper prices may be supported by “a massive stimulus program coming out of the Obama administration.” President-elect Obama has reportedly told House Speaker Nancy Pelosi he favors a $775 billion stimulus package.

However, any new demand will remain theoretical in the face of stockpiles that continue higher. Copper inventories monitored by the LME gained another 1450 metric tons yesterday, to 343,500 tons.

Brian Hicks, of U.S. Global Investors in San Antonio, says that, “I think we’ve found a bottom for copper, and that’s reflected in the changing sentiment.” But Hicks admits that, “I’m still not sure how much upside there is now” because of the sagging economy.

Questionable demand or no, resource-dependent Chile is wading into the fray. Yesterday, President Michelle Bachelet announced a $4 billion stimulus package that includes $1 billion in capitalization for state copper giant Codelco, the world’s largest producer, to help shore up its investment plans. The stimulus package will be funded from copper windfall earnings saved in sovereign wealth funds as well as through a bond issuance, Bachellet said.

And on the equities front, a number of Canadian base metal miners hit multi-month highs on the Toronto Stock Exchange on Tuesday, as some hope for a sustained rebound has leaked into the hard-hit sector.

“The realization is that the demand tap has not been turned off, it’s just been turned down a tad,” commented Ron Coll, an analyst at Jennings Capital.

Source: Industrial Metals Rally Strongly