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METALS-Lead rises to 16-month high on tighter supply, nickel slips

Published 29/09/2016, 05:44 pm
© Reuters.  METALS-Lead rises to 16-month high on tighter supply, nickel slips
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* Shanghai lead surges to highest since 2013

* LME nickel below seven-week peak, tin hits 20-month high

* Coming up: U.S. pending home sales at 1400 GMT (Adds BHP Olympic Dam copper mine shut, updates prices)

By Manolo Serapio Jr

MANILA, Sept 29 (Reuters) - London lead futures climbed to the highest since May last year on Thursday amid worries over tighter supply in top market China and elsewhere, while nickel slipped below seven-week highs with supply risks from top ore exporter Philippines seen limited.

Lead futures in Shanghai jumped more than 3 percent to the strongest level since 2013.

The supply of lead concentrate in China is "very tight and the shortage may threaten production of primary lead smelters in the fourth quarter," said Dina Yu, analyst at CRU consultancy in Beijing.

Global mine shutdowns over the past year and moves by lead producers to curb output amid low prices have tightened global supply of the metal used to make batteries. Yu is looking at a global deficit in lead concentrate of 146,000 tonnes this year and a deficit of 29,000 tonnes in China.

That compared to last year's surplus of 117,000 tonnes in China and 157,000 tonnes globally, she said. The upcoming winter is usually a high season for battery replacement since extreme cold weather typically causes failures.

Three-month lead on the London Metal Exchange CMPB3 was up 0.4 percent at $2,005 a tonne by 0717 GMT, extending gains for a fourth consecutive session. The metal hit $2,023 earlier, its strongest since May 2015.

On the Shanghai Futures Exchange, the most-traded lead contract for November delivery SPBcv1 closed up 2.2 percent at 15,005 yuan ($2,250) a tonne, after rising as far as 15,150 yuan, the highest since March 2013.

China's imports of lead ore and concentrate dropped 10 percent in January-August. Yu said China's stricter environmental regulations had also curbed the output of smelters that recycle lead ingot from batteries.

Nickel erased early gains on both LME and Shanghai, with some analysts seeing limited supply risks after the Philippines said on Tuesday it may suspend 20 more mines for environmental infractions. Philippines, which accounts for nearly a quarter of the world's nickel mined supply, has already halted 10 mines, eight of them nickel producers.

LME nickel CMNI3 dipped 0.4 percent to $10,650 a tonne, down from Tuesday's seven-week top of $10,900. Shanghai nickel SNIcv1 ended 0.3 percent lower at 81,860 yuan a tonne after earlier touching a seven-week high of 83,610 yuan.

Macquarie analysts say the disruption from the Philippines to the global market may be capped at between 15,000 to 20,000 tonnes of nickel ore given the upcoming monsoon season which limits mining and shipments there. Global nickel supply is seen at 1.9 million tonnes this year, they said.

Elsewhere, LME copper CMCU3 edged up 0.2 percent to $4,828 a tonne. A power outage in South Australia state has halted 300,000 tonnes of annual copper production capacity from BHP Billiton's BHP.AX BLT.L Olympic Dam and Oz Minerals OZL.AX Prominent Hill mines. zinc CMZN3 was flat at $2,333.50 a tonne and tin CMSN3 rose 0.6 percent to a fresh 20-month peak of $19,970 as inventories fell.

PRICES

Three month LME copper

CMCU3

Most active ShFE copper

SCFcv1

Three month LME aluminium

CMAL3

Most active ShFE aluminium

SAFcv1

Three month LME zinc

CMZN3

Most active ShFE zinc

SZNcv1

Three month LME lead

CMPB3

Most active ShFE lead

SPBcv1

Three month LME nickel

CMNI3

Most active ShFE nickel

SNIcv1

Three month LME tin

CMSN3

Most active ShFE tin

SSNcv1

($1 = 6.6705 Chinese yuan)

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