By Leon Westgate
The Chinese appear to have woken from their recent slumber, with copper having a very busy overnight session in terms of both price action and turnover. The base metals are stronger across the board, led by upper and helped by a weaker dollar.
Copper and nickel aside however, volumes amongst the other metals remain rather subdued. Copper volumes had started to pick up during Asian trade on Friday with that trend continuing this morning.
The sharp 8% drop in SHFE copper stockpiles on Friday may have precipitated some the increased activity in copper, spurring consumers into action, though month and quarter-end position housekeeping may also be a factor. Either way, copper has broken out of its recent range, with the red metal closing in on $7,700 heading into the afternoon.
LME copper inventories posted another decline this morning, with on-warrant stocks falling 2,250 mt thanks mainly to a 1,450-mt jump in cancelled warrants in New Orleans.
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Nickel has also had a solid start to the week, building on Friday's momentum to climb above $24,000. Technical signals remain very much in charge of price direction with the strength coming in spite of a 1,068-mt inflow of full plate cathodes into Rotterdam this morning and news that BHP Billiton has resumed output at its Kwinana refinery after an 11-day unscheduled shutdown.
As far as the nearby nickel spreads are concerned, we note that the latest LME data (March 25) shows the presence of a dominant position holder of cash and tom warrants sitting in the 50-79% band.
