Up On Speculative Buys; Pft-Taking Seen Next Wk

London Metal Exchange base metals pushed generally higheracross the board Friday, but prices could retreat on profit-taking and seasonalweakness early next week, said market participants.

A broker said speculative buying and short-covering have largely been behindthe support seen Friday, but "whether this will be a lasting trend into nextweek is really a question."

The first week of June is seasonally a weaker time because of speculativeliquidation and thin trading liquidity, said metals analyst Jorge Vazquez ofHarbor Intelligence. Recent strength in the U.S. dollar and bearish technicalsmay pressure base metals prices early next week, he added.

Three-month copper traded up to a high of $7,528 a metric ton beforeretreating to a PM kerb of $7,440/ton. A drawdown in Shanghai and LME copperinventories Friday, combined with supply concerns in Chile, provided strongunderlying price support, brokers said.

Chile's state copper giant Corporacion Nacional del Cobre de Chile, orCodelco, will begin negotiations with outsourced workers June 1 over pay andconditions, in hopes of avoiding a potential strike scheduled for June 8.

Over the longer-term, LME copper should find strong support due to lowinventories and substantial supply side risks, said Deutsche Bank. Adding tocopper price support, Chinese copper demand growth continues to beunderestimated, it said.

Three-month lead extended recent gains to hit another record high of$2,395/ton earlier Friday, due to speculative and fund buying triggered by adrawdown in LME lead inventories, brokers said.

Ongoing supply concerns also provided solid underlying support. Around 9,000tons of lead in concentrate at Australia's Port of Esperance will stay strandedfor at least another month pending approval from the Western AustralianDepartment of the Environment and Conservation, or DEC.

The metal has been stranded since March 12 when the DEC revoked the port'sexport license after thousands of birds died in the area as a result of leadpoisoning, with dust emissions from the port thought to be the source.

Adding to price support, China said last week that from June 1 it will addexport tariffs to lead, among other metals. Analysts said this is bullish forprices as the profitability of exporting will decline, raising the possibilityof fewer exports and therefore higher prices in the West.

Furthermore, an ongoing force majeure at Xstrata's U.K.-based Northfleetrefinery since Feb. 12 has compounded supply side pressure in a world marketalready in deficit.

Elsewhere, three-month nickel climbed to above $50,000/ton due tomedium-sized fund and speculative buying, said a broker, despite an increase innickel stocks Friday.

In metal news, Xstrata said Friday it was on track to convert its McArthurRiver zinc mine in Australia into an open-pit operation. However, the companysaid it launched an appeal to clarify a court ruling that suspended developmentat the mine in April. Current capacity at the mine is at 160,000 tons of zinc,or about 2% of global output.

Prices in dollar a metric ton. 3 Months Metal Bid-Ask Change from Thursday PM kerb Copper 7440.0-7450.0 Up 65 Lead 2371.0-2372.0 Up 41 Zinc 3760.0-3770.0 Up 65 Aluminum 2787.0-2788.0 Dn 2 Nickel 47400.0-47500.0 Up 1400 Tin 13900.0-13905.0 Dn 195 Aluminum Alloy 2230.0-2250.0 Unch Aluminum Alloy 2230.0-2250.0 Dn 5