Nickel was down in the pre-dawn hours but rallied through the rest of the day, closing at $4.8368/lb., up 5¼ cents. Zinc was sharply higher through most of the day, ending at its intraday high of $0.603/lb., up a penny. Aluminum was modestly higher, adding a quarter-cent to $0.652/lb., while lead was modestly lower, shedding a half-cent, to $0.5956/lb.

Copper continues to struggle to close over $2, carding a fractional loss yesterday after it fell short of what is proving a formidable barrier once again.

Analysts said the metal’s run early in the day followed the stock market. “A little bit of buying has crept through on the back of the Dow,” said James Roberts, of Sucden Financial in London. “The turnaround in prices is equity-driven.”

But the upturn in the dollar likely put a lid on things.

“We expect the currency markets and technical signals to continue exerting a strong influence over short-term price direction,” wrote analysts at Standard Bank.

Stockpile data was non-supportive, as inventories monitored by the LME rose by 2,300 metric tons yesterday, to 504,200 tons. But canceled warrants—metal earmarked for delivery—continued to soar, advancing to 59,825 tons yesterday, up from 27,675 tons a week earlier.

Inventories are still up by 48% this year, but with a lot of metal heading out for China, some see improvement ahead.

Analyst Judy Zhu was somewhat optimistic, writing that, “Data related to consumption of industrial commodities lead us to believe that the worst time for China’s demand may have passed, though we still believe that an immediate, strong rebound is unlikely.”

It’s not only copper that’s streaming toward China, either. As Platts wrote, “The wide spread between Chinese refined zinc prices and those quoted on the London Metal Exchange has led to an increase in zinc imports over the past three months, as local importers make huge profits.”

While supplies are tight now, “Industry participants, however, expect zinc imports to slow down by mid-May, when the buying season ends. Zinc end-users in China, such as zinc alloy producers, usually buy materials between February and May every year once they are back from the Lunar New Year break end January,” Platts wrote.

Source: Base Metals Move Little

Copper benefited from the strength in crude and the shakiness of the dollar, most of which had to do with the amped-up strife in the Middle East. Analysts generally believe any rally will be short-lived as demand destruction continues apace.

Supporting the pessimistic view were stockpiles that show no signs of slackening in their buildup. Copper inventories monitored by the LME gained another 5,250 metric tons yesterday, to 336,700 tons. Stocks have now risen 70% on the year, and are at their highest levels since February 2004.

The amount of copper now in LME and Shanghai warehouses is equivalent to 7.4 days of global demand. In contrast, the average was for 2007 was 4.9 days.

There was also sector-wide commodity strength, as the Reuters/Jefferies CRB Index of 19 raw materials climbed as much as 1.3%, led by energy and metals.

And aluminum got some support from stockpiles which have finally begun to ease a bit. November inventories were 1.4% lower than in October, according to a report from the International Aluminium Institute.

While stocks declined to 1.6 million metric tons from almost 1.63 million tons in October, the IAI said, they are still well above year-ago levels, which were 1.47 million tons in November 2007.

Source: Base metals modestly higher - Copper inventories higher, but aluminum stocks drop

Nickel fell as low as $4.50 at the New York open, but about-faced and pushed almost to $5 before easing late and closing at $4.8799/lb., up 25½ cents. Zinc also featured a steady upward progression to its intraday high of $0.5318/lb., up almost 2½ cents. Aluminum had a choppy trading day but managed to push to $0.8502/lb., up a penny and a half, while lead had a very strong day, ending at its intraday high of $0.6149/lb., up nearly 5 cents.

Copper led the industrial metals on a rare concerted upswing as the slippage in the dollar made them more attractive and traders took some heart from equities markets that rebounded from dismal lows to post powerful gains on the day.

News out of China got some close scrutiny.

The Chinese reported that copper output dropped 8% on the year in October, to an eight-month low, as manufacturers cut production in response to weakening demand.

“That’s not a surprise,” said Judy Zhu, an analyst at Standard Chartered Bank in Shanghai. “We’ve heard production cuts by smelters lately and I don’t think it’s going to create tight supply in the international market because the smelters are just trying to keep their inventory in check.”

At the same time, October industrial production rose only 8.2% in China, the statistics bureau said. The year-over-year gain was smaller than any economist had forecast in a Bloomberg survey.

“There has been a significant deterioration in momentum” in Chinese production, wrote analysts at Barclays Capital in London, and that “bodes ill for metals consumption.”

Meanwhile, aluminum inventories monitored by the LME rocketed up by 44,425 metric tons yesterday, to more than 1.56 million tons, a better than 15-day global supply, and the highest level on record for the contract.

Source: Base Metals All Push Higher, Getting a boost from Equities Markets

Zinc meandered around either side of 49 cents, ending up a half-cent, at $0.4893/lb. Aluminum was weak, dropping a penny and a half, to $0.8494/lb., while lead also plunged to its intraday low of $0.5724/lb., down nearly 3½ cents.

Copper tumbled to a three-year low as it led the sector downward amid—cue broken record—deepening gloom about the global economy.

The data are simply offering no relief. Among yesterday’s numbers, along with the October exports figure from China, the U.K. reported that home sales fell to the lowest level in at least three decades.

“Grim recessionary stats continue to roll in from all corners of the world,” wrote Edward Meir, of MF Global. “We do not expect to see any sustainable rallies resulting for a period of time.”

Putting a further damper on any hopes that China will show the way out of a worldwide recession, the vice president of the state-controlled China Nonferrous Metals Industry Association warns that China’s stimulus plan will only have a gradual effect on the country’s base metals industry.

Rising stockpiles are also playing in. Copper inventories monitored by the LME shot higher by 4,625 metric tons yesterday, to 265,475 tons. Stocks are up more than 27,000 tons already in November.

Adding to the carnage, the sharp drop in equities markets yesterday had a negative effect, as commodities tend to correlate with them.

Source: Base metals bomb -  China no longer seen as savior

Nickel hit a steep slide early, falling below the $5 mark shortly before New York opened, and staying there the rest of the day to close at $4.9804/lb., down more than 56 cents. Zinc was also off early, but a spirited morning rally propelled it $0.5036/lb., up more than a penny and a half. Aluminum followed much the same path but failed to break even at $0.8964/lb., down less than a half-cent, while lead was modestly lower, ending down just under a penny and a quarter, at $0.6747/lb.

Copper suffered through another down day as steeply rising stockpiles signal the global dropoff in demand.

Inventories monitored by the LME gained 7,275 metric tons (3.2%) yesterday, to 237,925 tons, forging a fresh high since mid-March, 2004. Nickel stocks are at their highest level since May of 1999.

Not only are prices “a bit weak,” said Simon Toyne, an analyst at Numis, but the “copper stock builds that have been going on the LME — the last few days have seen a number of thousands of tonnes … is a bit unnerving.”

On the slightly brighter side, “Copper as with most other spot traded commodities, is now into the cost structure, but probably a lot less deeply than some of the other metals,” Toyne added.

Copper is “looking a bit directionless,” says Gayle Berry, an analyst at Barclays Capital. “When prices are coming off quite a bit, you do tend to see the shorts beginning to look for a bit of cover.”

Berry believes that that “is what you are going to see much more of going forward—these violent swings in prices, given the size of the short positions being built in some of the metals.”

Meanwhile, “Until we either see some further large cuts in production or more importantly some signs of improvement on the demand side, it’s too early to get bullish” on nickel, said Adam Rowley, of Macquarie Group in London.

Some such cuts are already on the way. Nickel producers including Brazil’s Vale will slash production by about 140,000 tons this year and probably another 100,000 tons next year. That will narrow the global supply surplus to 20,000 tons next year from 30,000 tons this year and 95,000 tons last year, Macquarie said.

Source: Base metals mostly lower -  Nickel producers cutting production as demand slows and stockpiles rise

Nickel fell until mid-morning, before rallying back a little bit to close at $4.2018/lb., down better than 26 1/3 cents. Zinc had a pleasantly good day, rising fairly steadily to finish at $0.5101/lb., up more than 3½ cents. Aluminum also pushed higher, adding more than a penny and three-quarters, to $0.8918/lb., while lead moved up modestly, tacking on less than a penny, to $0.558/lb.

Once again copper failed to gain much traction, although it came well off its lows for the day (and a fresh 3-year low), as fear continues to dominate. The metal is now down 58% since July.

Even producers are getting pessimistic. Copper’s swift and savage fall has ushered in “the end of the supercycle” for the metal, says Jose Pablo Arellano, the executive president of Chile’s Codelco, the world’s biggest copper miner. Arellano expects that the market will remain depressed until the international economic situation begins to show signs of improvement.

Not that the selloff isn’t general. The Reuters/Jefferies CRB Index of 19 commodities yesterday hit its lowest level since February 2004, and the Bloomberg World Mining Index of 162 companies has shed $493 billion in value since the bankruptcy of Lehman Brothers in September.

“As long as we have uncertainty about the overall financial system, this is probably not yet the bottom for base metals,” said Christoph Eibl, of Tiberius Asset Management in Zug, Switzerland. “People just don’t want to own any commodities that have a high correlation to overall economic developments.”

On the supply side, copper inventories monitored by the LME continued to advance, adding 1,500 metric tons to 209,250 tons, while aluminum stockpiles jumped 3,475 tons to 1.5 million tons, their highest level since February 1995

In company news, Canadian miner Teck Cominco (NYSE:TCK) reported that net profit fell a worse-than-expected 13% in the third quarter, primarily because of the price declines in commodities. However, Teck also raised its outlook for 2008 capital spending by 26%, to about C$1.1 billion.

Source: Base Metals Mostly Stabilize

Zinc also traded up in the pre-dawn hours before falling to under $0.81/lb. A late rally salvaged the day as the metal surged up 3 ½ cents, 4.3%, to $0.8584/lb. Nickel tracked the movements of copper and zinc, riding a late rally to close at $8.3983/lb., up 14 ¾ cents. Aluminum rose steadily throughout the day, finishing up almost 2 cents, at $1.3453/lb. Lead also had a great day, breaking through $1 barrier once again to end at $1.0183/lb., up 4 ½ cents.

The main impetus for the rise in the base metals was the combination of dollar’s weakness coupled with rising oil prices. These factors served to make the base metals, and commodities in general, an attractive hedge against inflation for investors.

Lead’s gain, its largest in two weeks, was fueled by news that China, the biggest producer and consumer of the metal, will increase imports.

According to Jim Lennon and Adam Rowley of Macquarie Group Ltd. (ASX:MQG), “domestic lead demand [in China] has remained strong in 2008.” They continued that “a large increase in LME-canceled warrants in Singapore was reportedly due to market participants looking to move metal from the LME (CVE:LME) to China, selling the material for a profit.”

Despite the overwhelmingly good news on the day, there was some cause for concern for copper. A report by the U.S. Commodity Futures Trading Commission showed that hedge funds and large speculators cut net-long positions on the metal by 67%, only a week removed from a 54% decline.

“The funds are pulling out of copper and the other metals because of this picture of slowing demand and growth,” remarked Ron Goodis of Equidex Brokerage Group.

Source: Base Metals All Up

Nickel fell off at the New York open, bottoming at $9.05, after which a late-day rally helped it back to $9.1777/lb., down 10¼ cents. Zinc sagged, ending at $0.8131/lb., down more than a penny. Aluminum held up until mid-morning, but then sold off, eventually losing 2 2/3 cents, to $1.3541/lb., while lead also came well off its mid-morning high, dropping three-quarters of a cent, to $0.8865/lb.

Copper dipped lower on signs that Chinese demand is slowing.
China reported that stockpiles monitored by the Shanghai Futures Exchange gained 13% this past week, to 42,935 metric tons. That’s their highest level since May 29. Chinese production in the six months through June rose 19% from a year earlier, the country’s statistics bureau said.

“Rises in Chinese production, and increased stock levels in Shanghai, are having a much more direct downward impact today,” wrote Edward Meir, of MF Global (NYSE:MF).

And Donald Selkin, National Securities Corp. in New York, said that “between slowing worldwide demand and increased Chinese supplies … It’s hard to justify higher prices right now.”

China watchers have now revised their estimate of copper demand growth there at around 5% a year, compared with earlier expectations of 10%.

Yet, “Copper prices have remained very resilient over the past six months, this despite a deteriorating demand environment,” UBS analysts wrote. “This counter-intuitive performance is a function of continued supply growth disappointments and risks which have plagued copper producers.”

And technicians, consulting their tea leaves, chipped in by saying that there is strong resistance at $3.80 and especially $4.00, but good support at $3.63-3.65.

Meanwhile, aluminum’s slump was also blamed on rising stocks. Inventories monitored by the LME rose 4,325 metric tons yesterday. That put them at more than 1.1 million tons, the highest level since May 2004.

“There’s no real shortage of aluminium as we’ve seen from the large stock builds this week,” said Lehman Brothers (NYSE:LEH) analyst Michael Widmer. “It’s hard to make a case for prices to move higher but fears of supply disruptions in China due to power shortages and relatively high energy costs are supporting the market.”

And in company news, a Companhia Vale do Rio Doce spokesman called rumors that Vale was preparing a bid for Freeport McMoRan (NYSE:FCX)“totally baseless.”

Source: Base Metals See Red

Nickel was tightly rangebound throughout the day, ranging between $9.20 and $9.40 before settling at $9.2797/lb., up 3 cents. Zinc traded very erratically, but with a slight uptrend, ending at $0.8244/lb., up a penny and a half. Aluminum was little changed, giving up three-quarters of a cent, to $1.3812/lb., while lead staged a modest rally, adding a penny and a third, to $0.8944/lb.

Copper led most of the industrial metals higher on Thursday, as the general doom and gloom gave way to a spurt of optimism.

“Housing starts up 9 percent show a nice pick-up” in construction demand, said John Gross, publisher of the Copper Journal,

That’s bullish for copper since builders are the number one users. “People should be keeping their eye on the building and construction sector, as things could start turning around there,” said Gross.

The metal also benefited from technical buying.

And there are supply issues. Support for copper prices is “mostly coming from supply problems,” in the opinion of Michael Widmer, an analyst at Lehman Brothers (NYSE:LEH).

However, “Despite the positive tone, copper and other base metals will likely face further selling pressures as investors de-risk portfolios amid an uncertain economic environment,” said Bart Melek, of BMO Nesbitt Burns.

Regarding nickel, “The only evidence we see of a rebound is steady outflows of LME stocks,” said Randy North, of RBC Capital Markets in London. “Our contacts in the physical markets tell us that consumer activity is healthy. However, material is easy to come by.”

And Citigroup (NYSE:C) analysts predicted that production of aluminum may decline 2 million tons, or 5 percent of annual output, this year, because of “power supply problems.” Prices will average $2 a pound in 2009 and “rise further in 2010,” they wrote.

Source: Base Metals Up On Optimism

Nickel prolonged Wednesday’s slide, briefly falling below $10 before recovering to close at $10.0259/lb., down 39 2/3 cents. Zinc was off during the pre-dawn hours and never recovered much, ending at $0.8586/lb., down 2¼ cents. Aluminum was down for most of the day, but edged back to wind up essentially unchanged at $1.3794/lb., while lead sagged through the whole day, eventually shedding 3¼ cents, to $0.8051/lb.

Copper held up, on a mostly down day for the industrial metals, due to the labor unrest in Peru. A strike at Southern Copper’s Cuajone mine in Moquegua province has severely curtailed output, while the company’s Ilo smelter will have to close soon if supplies can’t get through roadblocks in the area. Strikes and protests have also broken out at other mines in Peru.

In addition, Norddeutsche Affinerie, Europe’s largest copper producer, said that China may have recently responded to high prices by selling part of its strategic copper stocks. That would account for diminished Chinese import demand for the metal in recent months.

Meanwhile, nickel oversupply grew in April to the widest in eight months as demand receded for the third month in a row, according to the International Nickel Study Group.

Supply exceeded demand by 13,700 metric tons in April, the INSG report said. Production increased 6.1%, year over year, while consumption was 112,800 tons, off 0.9% from March.

Zinc struggled as stockpiles of the metal jumped to a 21-month high. Inventories monitored by the LME rose 5.8% yesterday, to 152,175 tons, the highest level since September 20, 2006.

Zinc production outpaced demand by 64,000 tons in the first four months of this year, the World Bureau of Metal Statistics said.

Lower zinc prices have led to production cutbacks at smelters in China, according to researcher CBI China Co. The average operating capacity of the country’s 28 largest zinc smelters dropped from 83 to 78% in May year over year, CBI China said.

Source: Copper Rallies on Peru