June 20, 2016 / 10:52 AM / in 4 years

METALS-Copper gains as Brexit worries ease; nickel hits six-week peak

* Chinese aluminium output up 4.1 pct in May vs April-IAI

* Speculators take record short copper position in COMEX

* ShFE nickel up, tracks LME nickel on consumer interest (Updates with closing prices)

By Eric Onstad

LONDON, June 20 (Reuters) - Copper and other base metals extended gains on Monday as concern that Britain might leave the European Union eased and nickel hit a six-week peak on concern about top supplier Philippines.

The London Metal Exchange complex, also bolstered by a weaker dollar, joined shares and oil in sweeping higher after polls tilted away from a “Brexit” vote on Thursday.

“The recent polls have given an impetus to the market. The FTSE (share index) is up and that’s flowing through into today’s more risk-friendly environment. But that can change hour by hour - the roller coaster ride will continue,” said Robin Bhar, head of metals research at Societe Generale.

Three-month LME copper closed up 2 percent at $4,644 a tonne, after small gains on Friday. Prices are building a fragile base above $4,483.50, a four-month bottom hit on June 9, in a well-supplied market.

Bhar, back from last week’s metals industry event in Hong Kong, cautioned that even if Britain votes to stay in the EU, the market had limited upside.

“If ‘Remain’ is the result, we could have a knee-jerk rally but that should be sold into,” he said. “The mood at LME Week Asia was pretty bearish, there are no real factors to justify a move higher, so the default will be a slow ratcheting lower in prices over the slow summer period.”

Nickel was the top LME performer on Monday, gaining 2.3 percent to finish at $9,280, the strongest since May 5.

Nickel on the Shanghai Futures Exchange rallied 2.8 percent, tracking Friday’s gains in London, after a large stock withdrawal from available LME inventories and increasing buying interest for 2016 from consumers, broker Triland said in a note.

There has also been persistent concern about supply from the Philippines after the new president warned mining companies earlier this month about environmental damage, Commerzbank said.

“If mines were actually to be closed, which would then reduce supply, the situation on the world market would also tighten further,” the bank said in a note.

Also bolstering the metals markets was a weaker dollar , which makes commodities priced in it cheaper for holders of other currencies.

Aluminium ended up 1.1 percent at a six-week high of $1,633 despite data showing its production in top producer China rose 4.1 percent in May compared to April.

Some analysts have warned that aluminium’s gains this year of about 8 percent could be vulnerable to additional supply after Chinese smelters restarted on the back of firmer prices.

Zinc rose 1.5 percent to close at $2,010, lead climbed 1.7 percent to finish at $1,722 and tin fell 0.3 percent to $16,975.


Three month LME copper

Most active ShFE copper

Three month LME aluminium

Most active ShFE aluminium

Three month LME zinc

Most active ShFE zinc

Three month LME lead

Most active ShFE lead

Three month LME nickel

Most active ShFE nickel

Three month LME tin

Most active ShFE tin

Additional reporting by Melanie Burton in Melbourne; Editing by Ruth Pitchford and Susan Fenton

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