Copper slipped on Thursday as investors booked profits after the recent run higher, but prices were seen underpinned by a strike in Peru, while lead set a record high for the third day running. Generally lower prices for industrial metals weighed on London-listed miners such as Anglo American, BHP Billiton, Rio Tinto and Xstrata, which were all down between 1.5 and 3 percent.
Copper for delivery in three months on the London Metal Exchange ended down at $8,200 a tonne from $8,300 on Wednesday, when it touched a five-month high of $8,315, and compared with a record peak of $8,800 in May 2006.
"The base metal market is trading heavily, perhaps seeing some profit taking by the more nimble investors ahead of the key (US) payrolls data tomorrow," said Michael Jansen, analyst at J.P. Morgan.
Friday sees the release of monthly jobs data from the United States, which could help the market gauge the strength of demand, growth and confidence in the economy. It could also influence dollar direction - a key factor behind commodity price moves in recent weeks. Shanghai is closed all this week for National Day celebrations and that has subdued activity this week.
Copper's losses were seen limited because of strike action in Peru and supply tightness with one party holding a majority of the stocks in LME warehouses. Latest LME data shows that 90 to 100 percent of all copper warrants are held by a single party, which has contributed to supply tightness and higher prices.
"Production, especially of industrial metals, has been badly hit by strikes this year," Commerzbank said in a research note. "The outcome should be higher metal prices, thanks to higher wages costs, a production shortfall and a temporary shortage."
LEAD PREMIUM JUMPS: Lead prices set a fresh record high of $3,655 a tonne due to investor concern over supply tightness, but slipped to $3,605/3,610 a tonne from Wednesday's $3,640. Prices are about double the levels they were at the start of this year.
LME stocks are down around 22,000 tonnes, enough for one day's worth of consumption, but 90 percent of those stocks are also controlled by one party.
The tightness is reflected in the premium for cash material over the three-month contract, which at around $99 a tonne is the highest in more than three years and compares with a discount of around $4 in late July. Supply worries have been reinforced this week by news of a fire at Xstrata's Mount Isa zinc-lead concentrator in Australia, which could cut lead output by about 15,000 to 20,000 tonnes.
"Lead is enjoying a record run due to supply problems and people reach for their wallets to invest in markets that are disrupted," said ANZ analyst Andrew Harrington. Aluminium ended down to $2,423 from $2,482 on Wednesday, while nickel was at $30,800 a tonne from $31,525 on Wednesday.
Zinc slipped to $3,025 a tonne from $3,110. The metal gained more than 15 percent last month. "There had been fresh fund buying in zinc recently. But the rally seems to have ran out of steam now," a trader on the floor of the LME said. "People are taking profits." Tin closed at $16,050 versus Wednesday's $16,175.