The investment markets' hunger for commodities was illustrated once again last week by a clean sweep of gains for the futures contracts traded on the London Metal Exchange. The trading pattern for each metal was remarkably similar with highs being attained last Monday, all round dips to lows for the week on Wednesday with these then followed by returns to the levels of Monday or even higher by Friday.

Traders appear confused over how long this bull market can continue especially as it is so much fund led.

Stocks of all metals stored in Exchange warehouses fell last week with those of copper at 50,100 tonnes now down to one day's consumption and those of both nickel and tin looking particularly low.

Copper

Confusion continued to reign in this market with a forward price moving up to $3275 last Monday before dropping sharply to $3190 the next day and then to $3135 on Wednesday before regaining ground back into the $3200 area on each of the next two days before closing the week $45 up overall at $3242. Stocks fell by a net 3275 tonnes and the cash to three months spread remained in a $140 backwardation. The main theme for discussion remains on how long the strength of Chinese demand can continue, especially at these high prices.

Aluminium

Initially the market rallied up to a high last Monday of $1935 but this level was soon lost with a close that day at $1910. Thereafter the trading range was between $1890 and $1925 until aggressive trade buying on Thursday caused a rush up to $1945. Further strength the next day produced a $1970 high ahead of a $1963 kerb close for a week's gain of $74 per tonne with the spread moving out strongly to a $39 backwardation.

Exchange stocks fell by 16,775 tonnes to 58,7225 of which 120,375 are on cancelled warrants.

The secondary alloy gained $50 to $1730 while the US version put in $45 to $1720.

Zinc

One of the market's favourites, zinc put on $11 per tonne to close at $1391 having traded between Monday's $ 1047 and Wednesday's $1360. There were a number of attempts to break above the $1400 level but all proved unsuccessful. Stocks fell by 5300 tonnes to at last drop below the 600,000 level. Talk at the moment is all about the tightness in the concentrate market which is forcing smelters to either close or reduce output and there seems little chance of this situation being alleviated for the moment.

Lead

Although closing the week $20 higher at $965 this metal hardly set the world on fire with trading ranges that changed little from day to day. Having climbed to $965 on Monday the three months price then fell to $935 on Wednesday before recovering to a fresh high of $970 on Friday ahead of the close. Stocks fell but by only 50 tonnes but the spread did widen out to a backwardation of £45 per tonne. Fund and speculative interest remained sidelined.

Nickel

Although joining the rest of the market with a dip to $15,225 on Wednesday, nickel performed very well with a high on Friday of $16,350 ahead of a $16,125 close for an overall gain of $125. Stocks fell by 702 tonnes to only 9,414 and of these 3,168 tonnes are uncancelled warrants. Moving closely against the consensus of forecasts at the start of the year, nickel is once again looking to be heading higher on fundamental supply and demand factors but the high level of fund and speculative involvement does continue to cause concern.

Tin

Although gaining $125 over the week, tin continued to disappoint in the light of the strong fundamentals in the market. Exchange stocks fell by 262 tonnes to 3,360 and the backwardation remained out at $90 per tonne but higher levels are expected as the remaining stocks are tightly held. The weeks trading range was between $8300 and $8500 with Fridays kerb close at £ 8475. The $ 8500 level remains the barrier which has to be overcome before further gains can be made.