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Copper prices rose by about one percent in London on Monday, while nickel was looking to return to record highs on threats to mine supply and critically low world stocks, dealers said.

‘The market is bubbling away, but things are generally light. We are still digesting last week’s moves but I think metals probably want to try and forge a path higher,’ a London dealer said.

‘Aluminium, nickel and zinc certainly all look frothy, but copper is holding shy of the big number at $8,000, There is some forward selling that is keeping a lid on things.’

At 1000 GMT three month London Metal Exchange (LME) copper futures MCU3 were quoted at $7,590/7,605 a tonne, versus $7,530 at Friday’s close.

Nickel MNI3 was at $32,300/32,500, up $250 from Friday, when the metal hit a new high of $32,625 on threats to supply in New Caledonia and tight stocks.

‘Nickel is a dangerous market. The metal is pretty scarce and dips will be bought until we see a significant rise in stocks,’ a second trader said.

Stocks of the metal in LME warehouses were 5,148 tonnes, up 318 over the weekend, but 1,866 tonnes are earmarked for delivery, leaving just 3,282 left to support the 1.4 million tonne per year market.

France’s Eramet ERMT.PA said on Friday a general strike on the Pacific island of New Caledonia was costing it around $1 million a day and had left its Doniambo nickel smelter with some 10 days of feedstock.

Eramet is 60 percent owner of Societe Le Nickel (SLN), which produces around 70,000 tonnes of nickel concentrate a year, some 5 percent of world production. [ID:nL20660136]
Leading indicator

Last week, nickel, tin, lead and zinc all hit contract highs, despite downbeat economic data from the United States and China that have taken the gloss off metals since they peaked in May.

‘The scenario we are looking at is a rotation away from domestic construction and auto manufacturing into commercial construction and infrastructure,’ Sean Corrigan, chief investment strategist, Diapason Commodities Management, said.

He pointed to booming construction sectors in Germany and Japan. ‘The renaissance of construction in Japan and Germany seems to be picking up after the lost decade of the Japanese slump and the post re-unification hangover in Germany,’ he said.

‘Either we will wake up to the fact that the economic slowdown is worse than we thought and the market is in for a torrid time, or metals are telling us that our theory was right and we should look at base metals as a leading indicator and the economy is picking up again.’

In other metals, aluminium MAL3 was steady at $2,726/2,729 from $2,718 at Friday’s close, while tin MSN3 was flat at $10,150/10,200.

Tin gained as much as 12 percent last week, hitting a contract high of $11,000 after the closure of more than 20 small smelters in Indonesia.

The Indonesian government wants to regulate tin mining in Bangka Belitung Province after a demonstration by hundreds of miners against the closure of three smelters turned violent in early October.

Zinc MZN3 was at $3,975/3,990, up $5, after touching $4,005 on light fund buying, just $15 short of last week’s record $4,020.

Gold XAU was softer, tracking oil CLc1, which fell over one percent despite confirmation leading exporter Saudi Arabia was curbing November supplies after an OPEC agreement to cut output.