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Gold/Mining/Energy : Gold and Silver Juniors, Mid-tiers and Producers -- Ignore unavailable to you. Want to Upgrade?

To: LoneClone who wrote (33460)	2/21/2007 11:06:15 AM
From: LoneClone	Respond to of 78412

Lead prices boosted by supply concerns Source: Hoovers metalsplace.com Lead prices are at new record highs as sentiment toward the market turns positive on the back of supply concerns, primarily at one of Xstrata PLC's (XTA.LN) operations in Australia. But the apparent worries aren't being reflected by the premiums in the physical lead market, suggesting that the supply situation may not be as serious as market participants at first suspected. Lead, which is used primarily to make batteries, has been on an upward path since Feb. 8, when news first filtered through that there were some problems at Xstrata's Mount Isa smelter. The company then said on Feb. 12 that, as a result, it had temporarily restricted deliveries from its Northfleet lead refinery, which takes its feedstock from Mount Isa. Since then, LME lead has gained 20% to peak at $1,835 a metric ton earlier Tuesday. It's not clear what the exact problem is at Mount Isa and Xstrata didn't provide additional comment due to the company's pending annual results at the start of March. And several lead market participants in Europe said the problem with ground instability at Xstrata's Black Star lead mine, which is also at the Mount Isa complex, may have been a one-off event as there has been no further development to the situation since. Xstrata's spokeswoman Claire Divver was unable to provide further comment. Back in November, Black Star suffered problems to some of its mining equipment due to ground instability caused by the miner's switch to open pit mining in late 2005. Mount Isa produced roughly 150,000 tons of lead in 2006, around 4% of global production. Whatever the situation at Mount Isa, LME traders and analysts have cited this as key fresh fundamental news driving prices higher. "Because we don't know the details of the situation, traders are bound to take a worst case scenario which could spur further buying and short-covering," said London-based analyst Robin Bhar of UBS. Lead is facing a backdrop of an ever-tightening supply situation which has made further price gains likely. Any supply concerns therefore have the potential to take the market up in relatively illiquid conditions, particularly with Chinese participants absent for the Lunar New Year holiday this week. "Total LME (lead) stocks remain low at 32,500 tons with no lead stocks in any European warehouses," said London-based Kevin Norrish, an analyst at Barclays Capital. LME lead inventories at warehouses around the world have fallen over 20% since the start of 2007 and have provided strong support for prices. Yet physical premiums remain steady, merchants and consumers at battery companies in Europe said, largely because material remains in LME warehouses in Asia. Of the remaining tonnage on warrant in LME warehouses, 20,000 tons are in Singapore.