LME metals at new highs

London Metal Exchange (LME) base metals recorded new peaks on Tuesday on fund buying, and supply worries could push the markets even higher, traders said.
"As long as investors continue to buy, there is no reason for this rally to end. Clearly we have gone up a long way and we are overdue a correction, but it is almost too difficult to forecast what will happen," analyst Robin Bhar at UBS said.
"Timing and magnitude (of the correction) will depend on when the funds' appetite ceases," he added.
Copper closed at $6,450 a tonne, up $310, after its new peak of $6,493 in electronic trade. The rally was mostly driven by investor and fund buying, but concerns about supply were also underpinning the markets, traders said.
The month-old strike at Grupo Mexico's La Caridad mine, production problems at the Collahuasi mine in Peru and unrest at Freeport's Grasberg mine in Indonesia were cause for concern.
Grupo Mexico has indicated it could have problems meeting its May copper deliveries if the strike continues at its 300,000 tonne-per-year La Caridad smelter and refinery complex, Barclay's Capital said in a daily note.
"This is engendering extreme concerns over physical availability of copper with the seasonally busiest period for demand in second quarter now approaching," the report said.
As a result, the cash/threes spread flared to $145 backwardation from $22 in the beginning of last week.
"The markets are scared to get short especially in copper and zinc when you have a backwardation in the nearby spreads," an LME trader said.
Zinc closed 3.7 percent up at $3,120, after hitting a new record of $3,180, from Thursday's close of $3,010.
Grupo Mexico also has problems at its zinc division, which has declared force majeure on future deliveries.
Concerns over zinc availability were reflected in the cash-to-three-months backwardation, which widened to around $52 a tonne, up from less than $5 at the start of this month.
The fund buying also spilled over to aluminium and nickel.
Aluminium touched $2,720, the highest in 17-1/2 years and closed at $2,713, up $111.
Nickel peaked at $18,310, its highest since early 1989 when the metal hit $18,750. Nickel ended the kerb at $18,275, $325 higher.
Tin gained $245 at $9,170, nearing its highest in 17 years, and lead was up $19 at $1,190.