$$$$$~~~ COPPER GAINS $180 ~~~$$$$$Oct. 5 (Bloomberg) -- Nickel fell in London as growing stockpiles stoked speculation that a glut of the metal will increase. Copper headed for a weekly advance.
Oversupplies of nickel, which is used by stainless-steel makers, will be 30,000 metric tons this year and 45,000 tons next year as mine production grows, according to ABN Amro Holding NV. Stockpiles of the metal monitored by the London Metal Exchange rose 2,322 tons, or 7.1 percent, to 35,250 tons, the highest since Feb. 16, 2006.
``Bullish price sentiment towards nickel has clearly soured,'' ABN Amro analysts including Nick Moore wrote in a report dated yesterday. ``We think that the nickel market will register modest but persistent overall supply surpluses through to 2011.''
Nickel for delivery in three months dropped $330 to $30,470 a ton as of 2:13 p.m. in London on the LME, erasing a gain earlier in the week. The metal has dropped 8.5 percent this year.
Copper headed for a weekly gain after a Labor Department report showed job growth accelerated in September, reducing concern the economy is heading toward recession in the U.S., the second-largest user of the metal.
Payrolls grew 110,000 after a revised increase of 89,000 in August, the Labor Department said today in Washington. Jobs in August had been reported down last month.
``There is relief,'' said Dave Larke, a client liaison official at Mitsui Bussan Commodities Ltd. in London. ``Last month it was very much doom and gloom. Today's report is a little more positive.''
Copper for delivery in three months rose $180, or 2.2 percent, this week to $8,200 a ton. It was little changed today. China is the largest consumer of copper.
Smelter Strike
A three-day strike by workers at a copper smelter and two mines owned by Southern Copper Corp. in Peru reduced output by 10 percent, Chief Executive Officer Oscar Gonzalez Rocha said yesterday.
``The Peru strike predominates,'' said Alex Heath, head of base-metals trading at RBC Capital Markets in London. ``The supply-demand fundamentals for the likes of copper and lead and the buying that's been generated as they break higher is causing momentum to be maintained on the upside.''
ABN Amro raised its 2008 average price forecast for copper 9 percent to $3.15 a pound ($6,945 a ton). The bank expects a record average price this year of $3.35 a pound.
Production is estimated to fall short of demand by 120,000 tons this year before reverting to a surplus of 300,000 tons next year, it said.
Weaker Dollar
Copper is also benefiting from a decline in the dollar, said Nicole Elliot, a senior analyst at Mizuho Corporate Bank in London. ``I favor this one over gold,'' she said.
Copper has climbed 30 percent this year compared with a 15 percent rally in gold.
Lead rose $60, or 1.7 percent, to $3,670. The metal earlier climbed to $3,720 a ton. Stockpiles of the metal tracked by the LME dropped 25 tons to 22,275 tons, the exchange said today in a daily report. They have declined 46 percent this year.
Aluminum increased $4 to $2,427, tin dropped $120 to $15,930 and zinc gained $25 to $3,050.