LME REVIEW

LONDON (Dow Jones)-- London Metal Exchange tin and nickel surged to fresh record highs Thursday driven by supply concerns and low inventories, with traders growing wary of possible profit-taking at such high levels.

Roughly 20 minutes ahead of the London afternoon kerb, three-month nickel rose more than 2.5% to a record high of $39,350 a metric ton due to options-related short-covering, said a broker. The metal jumped over 4% to a PM kerb of $39,500/ton from Wednesday.

The sudden jump built upon earlier strength triggered by a large cancelation in warrants. Canceled warrants - or material accounted for and to be drawn down at a later date - maintained the recent large figure at 52% Thursday following Wednesday's 54%, and leaving less than one day's worth of world nickel consumption.

Meanwhile, three-month tin jumped to a record high of $13,200 a ton Thursday before retreating to a PM kerb of $13,075/ton. Supply uncertainties over key producers Indonesia and Bolivia continues to provide underlying price support.

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 - declared force majeure on its tin shipments Monday, after police arrested three senior officials Saturday and sealed the company's warehouses and an accounting section in Bangka-Belitung province. However, the company said it is still allowed to mine and smelt tin from Bangka-Belitung while it is under police investigation.

At the same time, uncertainty over the fate of Bolivia's Vinto smelter since it was seized from Switzerland's Glencore International AG and renationalized added to upside price momentum.

In other metals, three-month copper pushed sharply higher due to technical-related buying and short covering mainly from Chinese buyers, said a broker in London. Stronger buying interest from China and expectations of more to come have also added to bullish market sentiment, the broker said.

Copper jumped roughly 2% to a PM kerb of $5,840/ton from Wednesday.

As an exception, three-month aluminum fell roughly 0.8% to a PM kerb of $2,814/ton.

"Market participants continued in their attempt to push prices through the $2,850/ton key level but strong technical selling kept prices from moving above that level," said one aluminum trader in New York. If $2,850/ton is broken, prices will push up to $3,000/ton in a hurry, he said, adding, however, that the next level of support is near $2,740/ton.

Prices in dollar a metric ton.
3 Months Metal Bid-Ask Change from
Wednesday PM kerb
Copper 5840.0-5850.0 Up 120
Lead 1755.0-1760.0 Up 55
Zinc 3425.0-3430.0 Up 115
Aluminum 2814.0-2815.0 Dn 14
Nickel 39500.0-39600.0 Up 2025
Tin 13075.0-13100.0 Up 380
Aluminum Alloy N/A - N/A N/A
Aluminum Alloy 2200.0-2201.0 Unch