By Leon Westgate
A weaker dollar (or rather stronger euro) following yesterday’s EU agreement on how to deal with the Greek crisis has helped support prices this morning, with all of the base metals pushing higher.
Copper was much busier overnight with fresh Chinese buying interest emerging, while nickel has also seen very good turnover after prices broke out of recent ranges. Volumes elsewhere in the base metals complex remain pretty thin however.
Thursday afternoon saw the base metals rally, initially on the back of Ben Bernanke’s comments that the US economy continues to need accommodative monetary policies, then again on speculation that the EU summit would reach a deal on Greece. A late dollar-related sell off did take the shine off somewhat, however further dollar weakness this morning has seen the metals resume their uptrend.
Meanwhile, the CFTC meeting on whether to impose position limits in metal markets was largely inconclusive and is perhaps best viewed as part of the learning process for the commissioners, politicians and other interested parties.
Copper was much busier overnight with fresh Chinese buying interest emerging. The weaker dollar has been a key factor behind the recovery in prices, though copper also received an additional boost from a 13,636 mt (8%) fall in SHFE stocks. Prices have continued to strengthen heading into the afternoon with prices climbing back above $7,500.
Nickel has been the strongest performer over the past couple of days, with the metal building on yesterday’s strength and continuing to rally strongly this morning. 3-month prices have since climbed above $23,500 heading into Friday afternoon, the highest level since June 2008. In doing so, the metal has set a new high for the year and has broken out from its recent range, triggering fresh buying interest and short covering activity.
LME inventories have meanwhile continued to come under pressure, with headline stocks declining 1,074 mt today. Declining inventory, in a month which traditionally sees stocks build, has been one of the factors helping to underpin the metal’s recent price strength.
