* Tentative deal to end Sudbury nickel strike reached
* Nickel prices rally in thin trade
* Other metals also higher, paring recent losses
(Updates prices, adds quotes)
By Nick Trevethan
SINGAPORE, July 5 (Reuters) - London copper futures rose on
Monday, extending the previous session's 1 percent gain, and
nickel also rose in spite of a tentative deal to resolve a
year-long strike at a major producer in Canada.
Brazilian mining giant Vale (VALE5.SA) said it had struck a
deal with unions at the company's nickel and copper operations
in Sudbury and Port Colborne, Ontario.
A separate strike at Vale's Voisey's bay nickel mine in
eastern Canada began last August. The Sudbury and Voisey's Bay
operations together produce about 10 percent of the world's
nickel. [ID:nN04213666]
"The nickel price doesn't seem to have moved much. Of
course it's early in the trading day and U.S. markets are shut
for a holiday," said David Moore, commodities economist at
Commonwealth Bank of Australia.
"We have a deficit pencilled in this year of 20,000 tonnes
and a surplus of 10,000 in 2011, predicated on an end to the
Sudbury strike during the second half."
Three-month nickel on the London Metal Exchange CMNI3
rose $300 to $19,100 by 0440 GMT, reversing Friday's losses.
Nickel, up 3.1 percent this year, is the strongest performer of
the metals, most of which have seen double-digit percentage
falls.
Nickel prices have crept steadily higher since the strike
news broke, but with only 29 lots traded in holiday-thinned
dealing, there was scope for a bigger move when European
players enter the market.
LME copper CMCU3 rose $100 to $6,510, after finishing
Friday 1.2 percent higher. Last week copper prices dipped 6
percent, their biggest weekly drop in a month, and touched a
two-week low of $6,318.
From a technical perspective, copper could fall further
towards $4,800, Reuters analyst Wang Tao said in a six-month
analysis. (link.reuters.com/ruf75m)
"A move towards $4,800 is certainly on the cards," a trader
in Sydney said. "The trouble is China doesn't always play by
technical rules. They have swooped in and bought LME several
times when prices have dipped towards $6,000."
"Chinese buyers are such a large force and if demand there
remains fairly firm, Shanghai prices will stay high and
underpin London."
Benchmark third-month Shanghai copper SCFc3 ticked up 60
yuan to 52,410 yuan after a loss of 1.6 percent last week.
The market is already turning its attention to preliminary
trade data from China, expected on Saturday. Last month
preliminary numbers showed copper imports, including semis,
fell 40,000 tonnes to 396,712 tonnes.
Economic data out of China suggests demand should have
slowed, but falls in Shanghai copper stocks over the past two
months and firm cash prices suggest supply is tight.
The arbitrage window opened in the second half of June,
which could entice more material in; however, it may have come
too late to show up in June trade data.
"The trade number is a difficult call. All the macro data
is pointing to soft demand, yet the market looks fairly tight.
Either we are underestimating Chinese demand or imports have
slowed," a trader in Singapore said.
"High international prices in April and early May probably
mean imports will have dropped for June."
For a chart of the LME-Shanghai arbitrage, click:
here
Copper found some support from the dollar, which slipped
against the euro, countering a larger-than-expected drop in
U.S. payrolls for June. [ID:nN01165161]
The jobs report compounded negative sentiment from
below-consensus manufacturing surveys in the United States and
China, and slowing euro zone manufacturing. [ID:nN01108492]
[ID:nSLAUHE67Q]
Base metals prices at 0440 GMT
Metal Last Change Pct Move End 2009 YTD pct
chg
LME Cu 6510.00 100.00 +1.56 7375.00
-11.73
SHFE Cu* 52410.00 60.00 +0.11 59900.00
-12.50
LME Alum 1950.00 8.00 +0.41 2230.00
-12.56
SHFE Alum* 14815.00 40.00 +0.27 17160.00
-13.67
COMEX Cu** 290.40 0.00 +0.00 332.75
-12.73
LME Zinc 1821.50 46.50 +2.62 2560.00
-28.85
SHFE Zinc 15110.00 95.00 +0.63 21195.00
-28.71
LME Nickel 19100.00 300.00 +1.60 18525.00
3.10
LME Lead 1769.00 16.00 +0.91 2432.00
-27.26
LME Tin 17300.00 60.00 +0.35 16950.00
2.06
LME/Shanghai arb^ -812
Dollar/yuan 6.7743 \ 6.7749
** 1st contract month for COMEX copper
* 3rd contact month for SHFE aluminium, copper and zinc
^ LME 3-m copper in yuan, including 17 pct VAT, minus SHFE
third month
(Editing by Michael Urquhart)
