Base metals prices rallied sharply Monday, with London Metal Exchange tin spiking 12.6% on supply-disruption news and nickel and lead powering to new record highs, analysts said.
LME three-month tin, a contract that is usually an afterthought on the LME, rose to $11,000 a metric Monday afternoon, up 12.6% after news last week of three smelter closures in key producer Indonesia.
The smelters didn't have the correct operating permits, Indonesian police said.
Indonesian officials said the country's tin exports may fall by around 2,000 tons next month as the smelter closures hit refineries in the country.
"In light of the tin market's reliance on Indonesian production, tin prices can be expected to gain support from any supply disruption ... going forward," said analyst Kevin Norrish at Barclays Capital.
"Also supportive has been the violence that took place at Bolivia's largest tin mine, Huanuni, between co-operative miners and employees of the Huanuni operations," he added.
In addition, President Evo Morales said Sunday Bolivia would nationalize its mines as part of an overhaul of the country's mining regulations. This could result in possible supply disruptions, analysts said.
Meantime, striking workers in French-controlled New Caledonia in the Pacific have threatened to block nickel producer Eramet SA's Societe Le Nickel, jeapordizing nickel shipments.
LME nickel prices rallied to $31,900/ton, up 3.7%. Extremely low LME nickel stocks are at just 4,476 tons while canceled warrants leave only 2,514 tons available to the market.
"As long as stocks are so low, people won't go short," Sempra Metals Ltd. analyst John Kemp said.
Technical tightness for November/December dates in aluminium, lead and zinc would likely result in sharp gains for these metals going forward, Kemp added.
LME zinc neared its May record high of $4,000/ton to trade at five-month high of $3,965/ton, up 4.7%, with analysts expecting further sharp gains given the market's tight fundamentals.
LME copper "finally attracted specualtive support," Triland Metals Ltd. said after trailing gains in other LME metals for some days, with prices ending the day near the top of their trading range. Copper adding as much as 4.5% during the trading day to rise to a post-kerb one-month high of $7,800/ton.
Elsewhere commodity markets' performance was also firmer, with oil prices climbing above the $59 a barrel level and gold extending Friday's strong gains to a fresh two-week high of $595.50 a troy ounce.
3 months metal (prices in dollars a ton)
Bid – Ask, Change from Friday PM kerb
Copper 7768.00-7770.00 Up 308.00
Lead 1530.00-1535.00 Up 40.00
Zinc 3960.00-3965.00 Up 175.00
Aluminium 2677.00-2678.00 Up 42.00
Nickel 31800.00-31850.00 Up 1,050.00
Tin 10950.00-11000.00 Up 1,180.00
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