Lead strikes new high on supply woes from Australia

Tue, 03 Apr. 07 – Lead hit a new contract high on supply concerns from Australia.

Prices surged as Ivernia Inc said it is shutting down operations at its Magellan mine for a maximum of four months, after a lead poisoning scare escalated.

The company said today that it has decided to 'temporarily place the mine on care and maintenance,' and also declared force majeure on deliveries from the mine.

Shipments from the mine via the port of Esperance were suspended in mid-March after thousands of birds in the region died from lead poisoning and some people were affected.

At 1.31 pm, LME lead for three-month delivery rose to 1,960 usd a tonne against 6,860 usd at the close yesterday. It had struck 1,975 usd earlier in the session.

Edward Meir, an analyst at Man Financial, said that, in light of higher prices, two consecutive closes above 1,950 usd were needed to justify yet another move higher.

Other base metals were also firm, with copper near its intra-day high of 7,188 usd. LME copper for three-month delivery rose to 7,150 usd a tonne against 6,980 usd at the close yesterday.

Prices were up amid falling stocks stored in LME certified warehouses. The LME reported inventories fell 1,225 tonnes at 179,850 tonnes on the day since yesterday.

Cancelled warrants, which represent metal booked and due to leave LME warehouses, also increased by 1,700 tonnes.

A short-covering rally could be lifting copper higher in the short term, said UBS analyst, John Reade. 'But a sustained rally from these levels will require either a recovery in US demand or major production interruptions,' he added.

In other metals, tin was up at 13,975 usd against 13,740 usd, zinc rose to 3,190 usd from 3,179 usd, nickel rose to 47,650 usd from 45,600 usd at yesterday's close. Aluminium was also up at 2,807 usd from 2,757 usd.