Nickel Heads for Biggest Gain in 6 Months on BHP Supply Curb

Nickel Heads for Biggest Gain in 6 Months on BHP Supply Curb
March 28 (Bloomberg) --

Nickel headed for the biggest weekly gain in six months in London after BHP Billiton Ltd. declared force majeure on deliveries from its nickel mine in Colombia. Copper and aluminum also gained. BHP Billiton told customers last week that supply from the Cerro Matoso mine may be affected by the strike that began Feb. 27, spokeswoman Samantha Evans said today. The mine accounts for 3 percent to 4 percent of world output, according to an estimate by Fairfax I.S. Plc.

``That's going to add to the potential on the upside,'' Kevin Tuohy, a trader at MF Global Ltd., said today by phone. There's been more ``speculative'' investments in commodities including nickel this week, he said. Nickel for delivery in three months added $500, or 1.6 percent, to $31,900 a ton on the London Metal Exchange as of 10:07 a.m.

That would be a 12 percent weekly increase, the biggest since the week ended Sept. 21. Nickel, mostly used by stainless steelmakers, has more than quadrupled since 2002 as China overtook Japan as the world's largest user of the metal.

Chinese steelmakers may increase output by 23 percent this year to 9.1 million tons. LME-monitored nickel inventories increased 660 tons, or 1.3 percent, to 49,992 tons, the highest since September 1999. There may be ``a couple of thousand'' tons more going into warehouses registered with the exchange, Tuohy said. Prices already reflect that expectation, he said. One firm held 50 percent to 79 percent of LME nickel stockpiles as of March 25, exchange data show. There were identical positions in copper, lead and aluminum alloys.

Copper Stockpiles Copper stockpiles monitored by the LME fell 1.7 percent to 115,250 tons, the lowest since Aug. 14. Including inventories monitored by the Shanghai Futures Exchange and the Comex division of the New York Mercantile Exchange, stocks total 181,952 tons, or 3.5 days of global consumption. The figure is below last year's average of 4.9 days.

Copper for delivery in three months on the LME added $75, or 0.9 percent, to $8,580 a ton, the highest intraday price since March 10. Copper for May delivery added 0.8 percent to $3.934 a pound in after-hours electronic trade on the Comex division of the New York Mercantile Exchange. Aluminum increased $40, or 1.3 percent, to $3,070 a ton. Lead added $25 to $2,925 and tin dropped 20 percent to $20,625. Zinc increased $35 to $2,440.

The close: Bring on the second quarter+Tim Pullback House Buy +Sells

The close: Bring on the second quarterRTGAM

If you place importance in the quarter-by-quarter blows of the stock market - and who doesn't? - the stats are now in. The first quarter of 2008 was volatile and it was a money loser, leaving investors caught between choruses of "stocks are cheap" and "there is worse to come.

"The S+P/TSX composite index fell 3.5 per cent, the Dow Jones industrial average fell 7.6 per cent, the S[amp]amp;P 500 fell 9.9 per cent, most of the major European indexes fell by double digits, and Japan's Nikkei 225 fell 18.2 per cent.But for investors, there was something about these statistics that smacked of old news.

On Monday, the last day of the quarter, the mood shifted to better times in the second quarter - or April, at the very least.The Dow closed at 12,262.73, up 46.33 points or 0.4 per cent. That, of course, includes Merck [amp]amp; Co. Inc.'s 14.7 per cent meltdown that accounted for 53 points. Ignore that, which isn't entirely unreasonable given that the pharmaceutical giant's problems failed to infect the rest of the market, and the Dow ended the quarter with close to a three-digit gain. Citigroup Inc. rose 2.8 per cent and Intel Corp. rose 1.9 per centIn Canada, the S[amp]amp;P/TSX composite index closed at 13,339.2, up 105.41 points or 0.8 per cent.

The Big Banks enjoyed a nice ride, with Royal Bank of Canada gaining 4.3 per cent and Toronto-Dominion Bank gaining 3.7 per cent.The big losers were the gold producers, which did not fare well as the price of gold fell to $921.50 (U.S.) an ounce, down $15. Barrick Gold Corp. fell 1.7 per cent and Goldcorp Inc. fell 1.5 per cent. Is that bad news? If gold soars with heightened fears about inflation and monetary collapse, then its retreat can be seen as a harbinger of better days ahead - well, until the second quarter begins on Tuesday.[amp]nbsp;[amp]nbsp;Copyright 2001 The Globe and Mail