Base metals firmed on the LME as investor appetite for riskier assets improved, with traders looking beyond the immediate impact of Japan’s disastrous earthquake and tsunami to how the rebuilding effort will boost demand for metals.
Three-month LME copper briefly pushed above $9,300 per tonne on Wednesday after falling as low as $8,944.50 in the previous session. Volumes were healthy on Wednesday, with 8,060 lots of copper and 5,445 lots of aluminium traded by 10:30 GMT. On Tuesday, more than 27,000 lots of copper and nearly 20,000 lots of aluminium were traded by the 17:00 close. The all-time record volume copper recorded in a single day was 45,653 lots.
Although bulls rushed to take advantage of oversold conditions in metals and other commodities in early trading, other analysts believe that the rebound is merely reflexive and not fundamentally sound. “The old-guard Gold Bugs are waxing enthusiastic about gold’s performance yesterday and are making much of copper’s bounce from its lows also. We, on the other hand, make little of each other than as markets needing to bounce,” Dennis Gartman, author of the Gartman Letter, said.
Nickel rebounded strongly, rising $589 to $25,294. Inventories fell a net 1,104 tonnes to 126,570 tonnes, while cancelled warrants also dropped 12 percent or 1,038 tonnes to 8,610 tonnes.
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