By Leon Westgate
The base metals rallied overnight, helped by stronger Asian equity markets and reports that China will take a cautious approach to monetary tightening. in light of the ongoing uncertainty about the global economy and the possible impact of the European debt crisis.
With the euro continuing to weaken against the dollar this morning however, the base metals have come back under pressure heading into the afternoon.
Nickel rallied sharply overnight and during early trade, building on Friday’s strong close to climb back above $22,000. A 2,100 mt fall in LME on-warrant nickel stocks - due to a 1,332 mt jump in cancelled warrants in Asian warehouses - has helped keep nickel supported, though a stronger dollar is weighing on prices heading into the afternoon.
Norilsk Nickel is meanwhile preparing for the annual flooding of its port at Dudinka as the arctic ice melts. Operations at Dudinka will be suspended over the coming week, with the port expected to restart in early July.
Copper has had a busy start to the week in terms of volume, however, price-wise the metal is back around Friday's closing levels heading into the afternoon with a stronger dollar eroding the metal’s initial gains. Aluminium prices have followed a similar pattern to copper, however, by comparison aluminium turnover has been very poor.
In other news, PT Timah expects to increase its offshore production capacity as it faces increased competition on land from illegal miners and environmental rules limiting the company’s expansion on Bankga-Belitung.
This year may see offshore mining account for 60-70% of Timah’s total output this year, up from 48% in 2009. Production in 2010 is targeted at 50,000 mt of refined tin.
