Lead Advances as Stockpiles Decline; Tin Gains to 18-Year High By Brett Foley
July 31 (Bloomberg) -- Lead advanced the most in more than a month in London as the amount of available metal dropped, fueling speculation supply will fall short of demand. Tin climbed to the highest since 1989 and nickel had its biggest rise in six weeks. Inventories of lead tracked by the London Metal Exchange, or LME, declined 3.7 percent to 37,575 tons, the exchange said today in a daily report. That's the biggest daily drop since Nov. 30. Prices for the metal, used mostly in car batteries, jumped 86 percent this year and outpaced other industrial metals as supplies from Australia were disrupted and demand improved. ``A big drop in stockpiles today has reminded people that the metal is still in relatively short supply,'' David Thurtell, an analyst at BNP Paribas in London, said today in a telephone interview. BNP is a member of the LME. Lead for delivery in three months rose $175, or 6 percent, to $3,090 a metric ton at 1:37 p.m. in London, the biggest intraday increase since June 25. The contract traded at a record $3,500 a ton on July 20. Ivernia Inc.'s Magellan mine in Australia, which mines about 3 percent of the world's lead, halted exports March 12 after a pollution probe, and a smelter in Missouri operated by Doe Run Resources Corp. cut output this month after an explosion. Demand for lead will exceed supply for a fifth consecutive year in 2007, the Lisbon-based International Lead and Zinc Study Group said May 14. Tin Gains Tin gained $250, or 1.6 percent, to $16,400 a ton and earlier traded at $16,600, the highest since 1989. The market is in a ``significant deficit'' after supply disruptions in Indonesia, the world's second-largest producer, BNP's Thurtell said. The metal may rise to $18,000 this year, he added. Two companies held as much as 88 percent of LME-tracked tin stockpiles as of July 27, according to the exchange's latest data, squeezing supplies. One position emerged today accounting for 39 percent of inventories. Another company holds between 40 percent and 49 percent, according to the data. The market for tin is the smallest of the LME's markets. Indonesia began a crackdown on illegal mining late last year, issuing export licenses for refined tin only to companies that pay royalties. Demand exceeded supply by 6,700 tons from January through May, the World Bureau of Metal Statistics said July 18. China is the world's biggest tin producer and user. Mexico Strike Copper advanced $170 to $8,005 a ton. Employees at Southern Copper Corp. stopped work at Cananea, Mexico's largest copper mine, a union official said yesterday. Southern Copper is the world's fifth-largest producer of the metal. Copper smelters in China, the world's biggest consumer of the metal, have settled mid-year fees for processing raw material with BHP Billiton Ltd. and other miners, Beijing's Antaike Information Development Co. said today. The fees for contracts starting in July have been settled at almost $60 for treating a metric ton of copper concentrate and 6 cents a pound for refining, Antaike said. The fees, paid by miners, have been falling as smelters compete for raw materials due to a shortage of concentrates, Calyon said yesterday. Kazakhmys Plc, Kazakhstan's biggest copper producer, said today its second-quarter output of finished metal fell 6.9 percent to 91,342 tons as the company carried out maintenance at two of its smelters. Nickel increased $1,400 to $31,600 a ton. That's the biggest intraday gain since June 14. The metal used in stainless steel has fallen 37 percent since trading at a record $51,800 on May 9. `Robust' Demand Eramet SA, operator of the world's largest ferronickel plant, said demand for the metal was ``robust'' as stainless steel production expanded 7 percent in the first half. About two-thirds of nickel supplies are used in stainless steel. ``Buyers of stainless steel and nickel are reducing their purchasing by using up their inventories,'' Eramet said. Nickel demand in the ``short term'' will decline, resulting in a ``substantial drop'' in deliveries in the third quarter, it added. Zinc climbed $66 to $3,536. LME-tracked stockpiles of zinc dropped 1.6 percent to 65,875 tons, the biggest daily decline since June 7. Inventories are at the lowest since March 28, 1991. Aluminum was unchanged $2,758. To contact the reporter on this story: Brett Foley in London at [EMAIL PROTECTED]
