Lead prices approached their peak on Friday while copper was steady, with the market wedged between a fall in LME inventories, coupled with strike threats at mines, and a slowdown in Chinese imports.
The London Metal Exchange's three-month lead futures contract, which set a record high of $2,550 a tonne on Thursday, ended Friday's business at $2,540/2,541, up $80 from Thursday's close, after earlier trading up $2,545. Analysts think prices could rise further as fresh speculative money enters the market.
"There is no lack of fundamental factors to cite but there can also be little doubt that lead has become the new darling of metals investors and has thus benefited from outsize money flows," economist Stephen Briggs at Societe Generale said.
"Lead is starting to feel a bit like nickel earlier this year, so we may need to ask whether it might at some point see a similar slump." The metal, which is mainly used in batteries, has gained more than 50 percent since the start of the year.
The closure of the Magellan mine is exacerbating tight market conditions, and many believe it will stay shut for the near future. Owned by Canada's Ivernia, the mine was shut in April, when health officials stopped all lead exports from the Port of Esperance after a large number of birds died from lead poisoning.
Copper, often seen as a benchmark of the metals market in particular and of economic growth in general, ended the day at $7,435 a tonne, down $10 from Thursday's closing price, when it slipped on a hefty stock rise. "Strike talk is lending some support here, and dispelling some of the selling that we otherwise could have seen in the wake of the bearish Chinese trade data," analyst Edward Meir said.
LME inventories fell 1,775 tonnes to 117,825 tonnes, less than three days' global consumption and down about 100,000 tonnes since early February. The market seemed to shrug off the bearish news of Chinese copper imports slowing down. "Imports data did not have much of an impact on prices, it is offset by possible strikes," an LME trader said.
China's refined copper imports in May rose 148 percent to 116,749 tonnes from a year ago, but fell by 37 percent compared with April imports of 186,212 tonnes, official Customs figures showed on Friday.
"Stocks are low, there are supply threats. The market is well supported. But the question is can it rally from here? It may do but a lot will obviously depend on whether those strikes become actual," Bhar said.
Workers at Collahuasi, one of the world's largest copper mines, have set a strike vote for June 27. On Friday, they burned tyres near the mine in protest against the management's latest contract offer. Copper has shed some 16 percent since early May, when it hit an 11-month high of $8,335 and prices have been wobbling around current levels for the past weeks with market lacking fresh impetus.
Nickel was up $600 at $37,600, having fallen nearly 15 percent this week to a low of $36,100 on Wednesday. At this level, nickel is 27 percent below the peak of $51,800 it touched in May. Aluminium was down $12 at $2,697 while zinc was up $40 to $3,550. Tin was down $150 at $13,850. London-listed mining stocks BHP Billiton, Rio Tinto and Anglo American were down between 0.6 and 1 percent, while the FTSE index closed 0.4 percent down.
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