LME REVIEW

LONDON (Dow Jones)--London Metal Exchange lead, nickel and tin surged to record highs Tuesday on fund buying driven by tight stocks and supply concerns, with further upside expected, traders said.
Bullish fundamentals triggered a wave of fund buying once the U.S. entered the markets that helped push the prices of nickel, lead and tin to record highs, an LME trader said.
A drop in LME nickel stocks by 36 metric tons to 4,398 tons Tuesday and a large cancelation in warrants helped push nickel to a fresh record high of $39,950/ton on electronic trade after the floor close, with traders expecting the $40,000/ton to be hit very shortly.
With canceled warrants - or material accounted for and to be drawn down at a later date - at 52% Tuesday, available stocks comprise less than one day's worth of global nickel consumption.
Elsewhere at the LME, three-month lead surged to a fresh record high of $1,845/ton on electronic trade after the floor close, triggered by declining stock levels and ongoing supply concerns at Xstrata's 161,000-ton Northfleet lead refinery in the U.K.
Xstrata said on Feb. 12 that it had temporarily restricted deliveries from its Northfleet lead refinery, which takes its feedstock from Mount Isa in Australia.
Three-month tin also hit a fresh record high of $13,500/ton due to ongoing supply concerns in Indonesia.
Last week, an Indonesian trade official said state-owned tin producer PT Timah Tbk. can no longer legally export tin, as it hasn't been reissued an export license under new regulations.
Indonesia recently shut down its private mining and smelting operations on Bangka island, where the country's largest tin reserve is located. Indonesia's PT Koba Tin - a key industry player - said recently that it's still allowed to mine and smelt tin from Bangka-Belitung province while it's under police investigation.
Industry sources say Koba, which produces around 24,000 tons of tin a year, is only shipping about 20% of its normal amount.
Meanwhile, aluminum fell 1% to a PM kerb of $2,742/ton from Monday as spreads eased and aluminum stocks rose 9,250 tons to 773,225 tons Tuesday. LME aluminum inventories have climbed roughly 10% since the start of 2007. Prices in dollar a metric ton.
3 Months Metal Bid-Ask Change from
Monday PM kerb
Copper 5720.0-5725.0 Dn 80
Lead 1830.0-1835.0 Up 55
Zinc 3325.0-3330.0 Dn 67
Aluminum 2742.0-2744.0 Dn 38
Nickel 39800.0-39850.0 Up 1100
Tin 13490.0-13495.0 Up 295
Aluminum Alloy 2200.0-2210.0 Up 10
Aluminum Alloy 2160.0-2170.0 Dn 10