Nickel and lead peak amid supply concerns

Nickel and lead prices reached record levels Tuesday, leading a surge across base metals as traders returned to their desks following the Easter break.

Nickel hit a new record, rising to the psychological level of $50,000 a tonne but faded later in the session. It dropped back to $48,500 a tonne for a net 1.8 per cent fall on the session.

The nickel market remains tight with inventories of just 3,006 tonnes of the metal at the London Metal Exchange after a fall of 180 tonnes Tuesday. The threat of strike action at CVRD’s Voisey’s Bay mine in Canada poses a further potential disruption to supplies.

Lead rose 1.5 per cent to $2,020 a tonne after hitting a record $2,040 earlier in the session after a fall of 950 tonnes in LME inventories. Lead has also been supported by supply disruptions after Ivenia declared force majeure on shipments from its Magellan mine in Australia last week.

Copper jumped 5 per cent to $7,710 a tonne after China’s copper imports hit a record high of 307,740 tonnes in March. Imports in the first three-months of 2007 rose 58 per cent compared to the same period a year ago.

Zinc gained 3.3 per cent to $3,550 a tonne, supported by a fall of 500 tonnes in LME stocks. The strength in base metals spilled over into precious metals with gold up 1.2 per cent to $678.40 a troy ounce after volatile trading over the Easter weekend.

Geopolitical tensions continue to provide support for gold as tensions over Tehran’s nuclear ambitions show no sign of abating after its president said Iran was ready to enrich uranium on an industrial scale.

Palladium rose 1.3 per cent to $357 a troy ounce, supported by renewed fund interest, while platinum firmed 0.8 per cent at $1,261 a troy ounce.

Crude prices rose on evidence of robust demand from China and amid expectations of another fall in US gasoline stocks in the weekly inventories report released today.

ICE May Brent added 58 cents at $67.17 a barrel while Nymex May West Texas Intermediate gained 44 cents at $61.95 a barrel. China’s imports of crude oil jumped 8.9 per cent in March to 3.26m barrels a day compared with the same month last year, running just below the November 2006 record of 3.29m b/d.

Corn prices held steady in Chicago with the May contract 2½ cents higher at $3.66 a bushel after the US Department of Agriculture revised up its forecast for 2006/07 year-end stocks from 752m bushels to 877m bushels, above the market consensus of 839m bushels.

Chicago May wheat rose 12½ cents to $4.60 a bushel after the USDA revised its forecast for year-end stocks down from 472m bushels to 422m bushels.