Equity markets may have been unsure of their direction last week but this was certainly not the case with the contracts traded on the London Metal Exchange.
Without exception all metals recorded strong nett gains by the close of business. It was fund activity that caused the burst of strength with even the lead and tin contracts springing back to life.
While stocks of copper rose for another week, almost all the other metals recorded impressive drawdowns.
Thanks to an improved chart picture and fresh fund interest, this metal initially gained around $80 per tonne to $3150 by Tuesday. This level was then held despite a temporary dip on Wednesday to $3100 as the Chinese returned to the scene, until Friday when fresh fund and technical buying produced a $3230 high ahead of a $3225 close for a gain over the period of $161 per tonne.
An improving technical picture, ever declining stocks, this time by 14,025 tonnes and fresh fund buying all came together to give this metal a strong week of trading with higher closing prices on each day. The low for the week was at $1838 last Monday with the closing high on Friday of $1935 being a nett gain of $101 per tonne. The cash to three months spread widened slightly to a $12 backwardation but the current level of the forward price may well be hard to sustain.
The alloy contract gained $95 to $19760 while the US Specification version put on $60 to $1705.
Initially suffering from an early bout of profit taking, zinc fell from $1340 last Monday to a week's low of $1308 on Tuesday. The market then steadied back up to the mid-1330s before fresh fund buying produced highs of $1375 and $1378 on Thursday and Friday respectively ahead of a $1374 close for an overall gain of $53 per tonne. Exchange stocks continued their steady decline with a 7,300 tonne overall withdrawal.
Up to Thursday's close absolutely nothing had happened in this market with its trading range remaining between $905 and $923. On Friday it happened at last, after a long absence since the crash at the beginning of the year, the funds returned in force as the three month price broke above $930. Despite trade selling between $950 and $970, the institutions had the final say with a close on the high of the day at $981 for a week's gain of $73 per tonne. Stocks fell daily but by a total of only 375 tonnes.
Very much a fluctuating market in thin conditions, nickel first rose from a closing low last Monday of $15,200 to a week's high of $15,800 on Wednesday. The market then retreated that day to close at $15,350 followed by $15,250 on Thursday. Fresh speculative buying on Friday found sellers in short supply with a $15,725 high being the result. Finally the $15,625 kerb close represented a $350 gain for the week. Exchange stocks fell by a very significant 2,700 tonnes to take the remaining total down to 11,892 of which over 2000 are on cancelled warrants.
Almost ignoring the upside activity in the rest of the market, this contract had gained only $50 by the close of business on Thursday. The picture on Friday was entirely different; an early break above $8000 was all that was required for the funds to enter the scene in force with both stop-loss and position reversal buying. The resulting $400 jump in price took the market so much by surprise that potential trade sellers were reluctant to enter the fray. The final close at $8250 was a $360 gain over the week. Stocks fell by a hefty 775 tonnes to stand at only 4,735 in total. The backwardation moved out to $55 per tonne.