FX: METALS-Funds push for higher Q1 close; nickel at 22-mth high
MARKETS-METALS (UPDATE 5)
* Most commodities end Q1 with price gains
* Nickel seen extending gains in Q2, traders eye fund money
* Coming up: U.S. Chicago PMI March (1345 GMT)
(Updates prices, adds comments/detail)
By Humeyra Pamuk and Michael Taylor
LONDON, March 31 (Reuters) - Nickel hit a near-two-year high on Wednesday and is on track to outperform the rest of the metals complex in the first quarter, as supply shortages and robust demand from stainless steelmakers buoyed prices.
Funds keen to close the quarter with firmer prices have pushed aluminium and zinc to multi-week peaks and tin to its highest since September 2008. Copper was steady after an earlier fall, edging closer to a 19-month high at $7,878 hit on Tuesday.
The price of nickel, a key ingredient of stainless steelmaking, touched $25,085 a tonne, its highest since May 2008, and was at $24,921 a tonne at 1448 GMT versus Tuesday's $24,300.
Copper traded at $7,827.50 a tonne after falling to $7,759 a tonne earlier, versus a last bid of $7,849 a tonne. The metal, used in construction and wiring, is set for a quarterly gain of around 6 percent.
Analysts believe there is further room on the upside. For a graphic on first quarter price performances, click on http://graphics.thomsonreuters.com/310/CMD_Q1PRF0310.gif
"For nickel, the stainless steel order books are filling and are almost full for the second quarter," said David Thurtell, an analyst at Citi. "Metals are going crazy into the month-quarter end.
"As bullish as I am, on a risk-reward basis, metals are a 'sell' at these levels," he added. "There is always a risk that the economy disappoints."
Stainless steel mills account for about two-thirds of global nickel demand.
A series of strikes, project delays and production problems are expected to send the nickel market into deficit in 2010, the first time in four years. For a poll on the market balance, click on LME nickel inventories hit a record high above 166,000 tonnes in early February. But since then, they have dropped around 6 percent to their lowest since late-2009.
"The outflows from the LME in terms of types of nickel has mainly been briquettes...which is preferred because it's smaller and it's easier to fit into feed mechanisms ... which to me indicates that it's a consumption driven phenomenon," said David Wilson, an analyst at Societe Generale.
Investment flows will continue to be a key driver of the industrial metals market in the second quarter, analysts said, particularly for copper, where the market needs fresh flows to keep the rally going.
"I'll call it fund pump at the end of the month," a trader on the floor of the LME said. "That's why the whole complex is rising. When there's money in the system you can't fight it."
Moves in the currency markets have been a major driver of commodities. On Wednesday, the euro's strength versus the dollar helped improve the sentiment, though the single currency still looks vulnerable because of Greece's fiscal problems.
Battery material lead was traded at $2,140 from $2,135, while aluminium rose to $2,343 a tonne, its highest since Jan. 14 and was last at $2,323 a tonne versus $2,294.
Investors are awaiting the U.S. March non-farm payroll data, scheduled to be released on Friday, for more insight into the health of the economy.
Zinc hit a fresh three-week high at $2,408.50 a tonne and was last at $2,2380 a tonne from Tuesday's $2,380. Tin touched $18,565 a tonne, its highest since September 2008, and was last traded at $18,500 a tonne versus $18,370.
Metal Prices at 1450 GMT Metal Last Change Percent Move End 2009 Ytd Percent
move COMEX Cu 355.75 0.25 +0.07 332.75 6.91 LME Alum 2320.00 26.00 +1.13 2230.00 4.04 LME Cu 7825.00 55.00 +0.71 7375.00 6.10 LME Lead 2135.00 -16.00 -0.74 2432.00 -12.21 LME Nickel 24900.00 600.00 +2.47 18525.00 34.41 LME Tin 18375.00 5.00 +0.03 16950.00 8.41 LME Zinc 2375.00 -5.00 -0.21 2560.00 -7.23 SHFE Alu 16575.00 -85.00 -0.51 17160.00 -3.41 SHFE Cu* 61320.00 -370.00 -0.60 59900.00 2.37 SHFE Zin 18795.00 -115.00 -0.61 21195.00 -11.32 ** 1st contract month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07
