Base metals close higher in London

The weaker dollar, end-month valuations and supply concerns for lead and nickel boosted London Metal Exchange prices Thursday but the start of a new month could result in losses Friday, traders said.

Lead and nickel posted the strongest gains on the back of supply concerns but copper appeared to be "shunted up for month-end valuations," Malcolm Freeman, managing director at Ambrian Commodities Ltd. said.

"I wouldn't be surprised to see the market coming off tomorrow (Friday)," he said.

Strong gains in the precious metals market and the dollar sagging to a 20-month low against the euro provided additional upside, but concerns for the U.S. economy reinforced a more hesitant tone for copper, traders said.

Chicago PMI data Thursday, measuring manufacturing activity, fell to 49.9, with the 50 level seen as a breaking point for manufacturing on whether the sector is expanding or contracting.

LME lead rose to a two-week high of $1,680/ton, up 4.3% on the Wednesday PM kerb following fresh concerns over Chinese supplies now the country's export VAT rebate has come to an end, brokers said. China cut tax rebates for exports of some products as part of efforts to balance its two-way trade.

Concerns for delays in new nickel mine capacity maintained upside pressure for the nickel market, following delays in the start up at BHP Billiton's Ravensthorpe mine in Western Australia.

Analysts said the project's been flagged for some time as having problems sourcing equipment and labor, so there's always been room for some slippage in its timetable. Ravensthorpe is now slated for the first quarter 2008 instead of the second quarter 2007.

The delay comes on the back of news that CVRD's Goro nickel project in New Caledonia has been put back to the end of 2008 instead of the first half.

"Implications of this news is that the deficit we had for 2007 of 5,000 tons is now likely to increase to about 30,000 tons and for 2008 a deficit of about 20,000 tons is projected, from a roughly balanced market," said UBS analyst Robin Bhar.

3 months metal (prices in dollars a ton)
Bid – Ask, Change from Wednesday PM kerb

Copper 7080.00-7085.00 Up 170.00
Lead 1660.00-1665.00 Up 50.00
Zinc 4373.00-4375.00 Up 93.00
Aluminium 2737.00-2738.00 Up 57.00
Nickel 33945.00-33950.00 Up 1295.00
Tin 10425.00-10450.00 Up 175.00