Metals - Base metals rise as slowdown fears fade, lower stocks boost sentiment

Metals - Base metals rise as slowdown fears fade, lower stocks boost sentiment

	Published : Tue, 06 Mar 2007 14:17 By : Agencies Print this Story

LONDON (AFX) - All metals rose as fears of a global economic slowdown faded and lower stocks helped boost sentiment.

Base metals across the board joined the commodity rally, and edged up after London shares climbed higher in early deals this morning.

'On the assumption that the worst of the risk aversion is behind us we would expect base metals to maintain the recovery as supply/demand fundamentals remain tight,' said UBS analyst Robin Bhar.

Rumours last week that the Chinese authorities are set to take steps to control the booming economy have sent jitters though markets worldwide. Slower Chinese growth could ease demand for base metals, especially copper, which is essential for the country's fast-growing manufacturing sector.

Furthermore, investors had shied away from high risk assets, such as metals, amid the global equity sell-off.

However, metals were up today as falling inventories lifted prices and recovering stock markets prompted 'consumer bargain hunting' which helped to 'rally prices further during the session,' added Bhar.

Copper stocks stored in LME warehouses were down 1,125 tonnes at 206,050 tonnes, said a daily LME report.

At 12.52 pm, LME copper for three-month delivery was up at 6,000 usd a tonne against 5,890 usd at yesterday's close.

'Concern of slowing economic growth in the world's top consumers (China and the US), may have been overdone,' noted Alex Heath, head of the RBC Capital Markets base metals team.

Analysts added high Chinese copper imports will fuel prices. Support for copper will be found in 'the strength in Chinas refined copper imports as reflected in the latest Chinese metals trade data,' said a weekly Barclays Capital report.

Stocks of all metals fell, with nickel as the only exception, according to a daily LME report.

Nickel stocks rose by 120 tonnes to 3,810 tonnes but stocks of the metals are still at dangerously low levels, with total inventories equivalent to less than one day's global consumption.

Looking ahead, analysts added the second quarter is seasonably busier and demand for metals is widely expected to pick up, forcing prices higher.

Nickel was up at 40,150 usd from 39,300 usd at yesterday's close.

In other metals lead was up at 1,880 usd a tonne against 1,815 usd at the close yesterday, zinc rose to 3,340 usd against 3,250 usd, aluminium was up at 2,725 usd against 2,768 usd while tin rose to 13,400 usd against 13,100 usd.

anealla.safdar@thomson.com

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