London Metal Exchange lead fell on Tuesday after a partial force majeure was lifted in Britain and nickel prices came under pressure as inventories rose, analysts said. London Metal Exchange nickel was down by 3.3 percent or $1,600 to $46,200 per tonne at the end of the day.
It touched a low of $46,050 earlier, with stocks in LME warehouses rising by some 6 percent, or 504 tonnes, to 8,460. Lead shed $45 to $2,325 after falling 3 percent to $2,300 when Swiss-based Xstrata Plc said it would lift the partial force majeure at its Northfleet refinery.
"We informed our customers last Friday that Northfleet will be back to 100 percent on July 1," the firm said. The company declared partial force majeure at the lead refinery in early February owing to problems at its Mount Isa operations in Australia, which supplies feed to the plant.
Three-months lead has gained some 15 percent over the past month and hit a record of $2,395 last week on concerns about delays in shipments from Ivernia's Magellan mine from the Australian port of Esperance. Standard Bank has raised its average lead cash price forecast for 2007 to $1,950 a tonne from $1,800 previously.
In nickel, substitution and production cutbacks are seen with POSCO, the world's third-largest steel maker, focusing on no-nickel stainless steel products as record nickel prices squeeze profit margins.
"Some of it (the rise in stocks) is due to people destocking in the face of very high nickel prices and some of it is due to a little bit of substitution," analyst Andrew Keen at Sanford C. Bernstein said.
Nickel has gained some 40 percent this year, hitting $51,800 on May 9 on strong demand from the stainless steel sector, accounting for two-thirds of all nickel output.
On Tuesday, Citigroup raised its long-term price view on nickel by 50 percent to $6 per lb, and upgraded miner BHP Billiton. Three-months aluminium slid $22 to $2,803.
The focus was on the large option for June expiring tomorrow. "The market is likely to remain watchful in case there is a last minute dash for the 17,200 lots of $2,900 strikes," William Adams at BaseMetals.com said in a report.
With the market almost $100 below that strike price, however, it was unlikely they would be exercised, Barclays Capital analysts said. Three-months copper was at $7,540, down $85.
Copper has gained 20 percent this year but prices are 10 percent below the record high of $8,800 set in May last year. LME copper stocks fell by 600 tonnes to 123,300 tonnes on Tuesday, the lowest since late October 2006 and down by some 40 percent since the beginning of February LME/STX1. Shanghai stocks fell by 4 percent to 95,254 tonnes last week. Tin was at $13,950/14,000 against its last quote of $13,975/14,000 and zinc shed $65 at $3,775.