LME REVIEW

DJ LME Review: Quiet Trading On US Holiday; Consolidation Seen
LONDON (Dow Jones)--Trading activity on London Metal Exchange base metals was quiet Monday because of the U.S. Presidents Day holiday, but consolidation is expected to be a key feature over the next few days, traders said.
Earlier Monday, three-month lead pushed to a new record high of $1,817.50 a metric ton before retreating to a PM kerb of $1,775/ton on profit-taking.
Systematic buying and trade short covering provided strong upside momentum that was underpinned by supply concerns.
News last week that Xstrata PLC declared force majeure at its Northfleet lead refinery in the U.K. following reduced supplies from its Mount Isa smelter in Australia, provided further price support. Northfleet produced around 161,350 tons of lead last year, using feedstock from Mount Isa.
LME lead stocks Monday fell 825 metric tons to 32,475 tons, adding to price strength, and stocks have fallen roughly 20% since the start of 2007.
"With the U.S. out on holiday, we've seen incredibly light volumes traded Monday," said one LME trader. "Many of the markets are in consolidation mode which I expect will continue for the next several days, particularly as the Chinese are out for the week celebrating the Lunar New Year," the trader added. China is the world's largest consumer of a variety of base metals.
Three-month tin was lightly supported, rising 0.03% to a PM kerb of $13,195/ton.
Tin industry specialist ITRI said Monday that 2007 global tin production is estimated at 337,000 tons while global tin consumption is estimated at 377,000 tons. Combined with a U.S. stockpile disposal of roughly 10,000 tons, this leaves a 2007 supply deficit of roughly 30,000 tons, ITRI said.
Three-month copper, nickel and aluminum were under modest pressure due to profit-taking, the LME trader said.
Aluminum prices fell 0.5% to a PM kerb of $2,780/ton from Friday. "The squeeze in aluminum seems to be falling apart as the dominant long position has give up part of its position," said a LME broker.
In addition, LME aluminum stocks are readily available with inventories having climbed nearly 10% since the start of 2007.
Ongoing political tensions in Guinea - the world's largest exporter of bauxite - have provided underlying support despite the head of Guinea's military relaxing a nationwide curfew Sunday.
Bauxite is a key raw ingredient to make alumina, which is in turn refined to make aluminum.
According to an official at Norwegian shipping company Torvald Klaveness Group Monday, there haven't been any bauxite shipments yet from Guinea's port of Kamsar despite the restart of limited production at the country's operations.
Sources in the panamax-bulkers market said full port activity is unlikely until the end of martial law there, currently scheduled for Feb. 23.
Guinean President Lansana Conte declared martial law early last week after dozens died in riots and clashes between protesters and security forces over Conte's appointment of a political ally as prime minister.
Prices in dollar a metric ton.
3 Months Metal Bid-Ask Change from
Friday PM kerb
Copper 5800.0-5805.0 Dn 5
Lead 1775.0-1780.0 Dn 10
Zinc 3392.0-3395.0 Up 12
Aluminum 2780.0-2783.0 Dn 13
Nickel 38700.0-38800.0 Dn 200
Tin 13195.0-13200.0 Up 55
Aluminum Alloy 2190.0-2210.0 Dn 20
Aluminum Alloy 2170.0-2180.0 Dn 10