Nickel hit a new all-time intraday high for the second day in a row, reaching the psychologically significant 50,000 usd level, as inventories slid by a further 312 tonnes to 6 pct to 5,124 tonnes.
Prices have since eased to trade slightly lower, although they remain elevated, analysts said.
“The market has had this level in its sights for a while, and the LME stocks have provided it with an excuse to hit 50,000 usd,” said Basemetals.com analyst Martin Hayes.
The metal, a key component in the manufacture of stainless steel, has doubled in price since a year ago as supply remains limited.
The threat of strike action at the Voisey’s Bay nickel mine in northern Labrador, plus reports of a dip in production from Australia’s Minara Resources, have raised fears of a further drop in stocks, buoying prices.
At 11.31 am nickel for three-month delivery stood at 49,350 usd, against 49,450 usd at the close yesterday.
Lead, which hit an all-time intraday high yesterday of 2,012 usd, also briefly pushed higher to 2,105 usd per tonne before easing slightly to trade at 1,995 usd.
Prices have been buoyed by a strike at the La Oroya mine and smelter run by the US’ Doe Run in Peru, which has entered its third day, analysts said.
The metal also continues to benefit from the closure of Ivernia Inc’s Magellan mine in Australia, which is responsible for 3 pct of the world’s lead supply, pending the outcome of an investigation into lead poisoning at the Esperence port.
Among other metals, copper eased slightly after yesterday’s strong gains as a recent period of short covering came to an end and as investors digested weaker-than-expected US data yesterday, analysts said.
However, prices remain high as institutional funds continue to buy and amid supply fears linked to the ongoing Doe Run strike.
Copper stood at 7,380 usd, against 7,395 usd at close yesterday.
Copper prices have climbed strongly this week, largely on institutional funds buying and as investors covered short positions.
But John Kemp, an economist at Sempra Metals, said the period of short covering “is largely coming to an end, which is blunting upwards momentum”.
Market fundamentals remain weak, with the US yesterday releasing weaker-than-expected economic data, fuelling fears of an economic slowdown in the world’s largest consumer.
The Institute of Supply Management said yesterday that the US service sector expanded at a slower rate in March than in the previous month.
The ISM said its index of business activity in the non-manufacturing sector registered 52.4 in March, down from 54.3 in February and well below analysts’ expectations for a reading of 54.7.
Fears emerged too of a slowdown in the growth of demand from China, the world’s largest market for copper, after press reports that Chinese importers are cancelling orders on the elevated price.
“We do not believe imports will continue to lift aggressively this year at prices above 3 usd/lb (around 6,600 usd/tonne),” said Merrill Lynch in a note.
Meanwhile, aluminium was trading at 2,830 usd, against 2,865 yesterday, and zinc was at 3,410 usd, down from 3,465. Tin was at 14,200 usd against 14,125.
Information from: www.fxstreet.com