LME lead soars, copper higher on labor dispute

London Metals Exchange lead futures soared Tuesday as investor sentiment revived, while LME copper benefited from a labor dispute at Grupo Mexico, market participants said. LME lead was up 7% from Monday, hitting $3,105 a ton as of 1705 GMT and reversing the steep decline that began just over a week ago. The market has realized last week's selloff was too vicious as fundamentals remain intact with the 10% Chinese export tax, ongoing supply disruptions and dwindling LME stocks, said JPMorgan analyst Michael Jansen. LME stocks declined almost 4% in data Tuesday to leave inventories near 37,500 tons. Jansen expects LME lead to return to $3400-$3500 a metric ton near term. LME copper regained $8,000/ton as of 1700 GMT, boosted by news of Grupo Mexico (GMEXICO.MX) workers planning to strike at three mines, said a London-based broker. The market has "wrestled control from the bears," he noted. However, a Grupo Mexico official said late Tuesday the company expects the strikes to be declared illegal and that operations will resume soon. In related news, union officials from Southern Copper Corp.'s (PCU) Cuajone and Toquepala mines and smelter and refinery in Peru plan to meet Tuesday afternoon with officials from the Labor Ministry to see if a deal can be reached on a new collective agreement, union officials said. Also this week, Chile's Codelco and contract workers reached a preliminary agreement to end a 36-day strike. Analysts said a rally in tin futures has "further to go" with speculative players seen taking it higher. As of 1644 GMT, LME tin traded at $16,300/ton, down from a fresh high of $16,600/ton. "The same players as those behind the previous nickel and lead gains are no doubt at work on the tin market now," said Commerzbank in a daily note. "According to LME statistics, one investor held more than 40% of all tin stocks last week," it added. Analysts said there was little fundamental news to support the advance, except for holding key technical support levels Monday. "We expect the current run in metals to continue for another day or two, as the advances seem to be both broad-based and technically justified," he added. LME nickel climbed 4% to an intraday high of $32,000/ton Tuesday before easing to $31,446/ton as of 1706 GMT. In other metals, LME zinc traded more than 2% higher at $3,545/ton as of 1700 GMT, while LME aluminium traded flat at $2,750/ton.