Lead prices rose to their strongest in nearly two months on Thursday, pushed higher by concern about shortages of available inventories after one party acquired over half of them. The metal, mainly used in batteries, has been the best performer on the London Metal Exchange this year, dipping only 6 percent compared to 25 percent for copper, and has been the only one to post a rise in the fourth quarter.
LME lead inventories that have not been earmarked for delivery out of warehouses have slid this year by 62 percent to 80,625 tonnes. "The clear culprit for resilient lead prices thus seems to be its low visible stocks, allowing the re-emergence of a highly dominant position," said analyst Vivienne Lloyd at Macquarie.
LME data shows that one party has taken control of 50-80 percent of those available stocks. "LME lead quite likely has some moments of decent but short-lived upside still to come," Lloyd added in a note. Three-month LME lead closed up 0.6 percent at $1,743 a tonne after touching $1,753, the highest since October 28, building on gains of 1.9 percent on Wednesday. The LME closed early for Christmas eve and will reopen on Tuesday.
Other metals were mixed, as traders adjusted portfolios and squared position ahead of the end of the year. Sister metal zinc, usually produced in the same mines as lead, ended down 0.1 percent at $1,552 a tonne after an intraday peak of $1,577, the highest since December 2, following 2.4 percent gains from the previous session. Copper slipped by 0.6 percent to finish at $4,690 a tonne, after a gain of 1.2 percent in the previous session.
"Unsurprisingly the whole market seems to be in shutdown mode... and (it) will most probably carry on through next week," said Kingdom Futures in a note. "It is only a significant news item that could change things and it is unlikely that a true picture and sense of true market direction will emerge until after the New Year." Aluminium ended unchanged at $1,536 after touching a high of $1,564, the strongest in over two months, as hope grew that China would get to grips with overproduction. China has set out special funds to support the resettling of laid-off workers, potentially helping to speed up consolidation in China's glut-stricken aluminium sector,
Argonaut Securities said in a note. "China's industry consolidations and old capacity closure will be on the fast track, a big positive catalyst to battered commodity stocks," it said. Nickel closed 0.9 percent weaker at $8,620 while tin dipped 0.1 percent to $14,600.