Lead touches peak

Copper ended slightly firmer after jumping to seven-week highs early on Tuesday on a softer dollar and strike threats, while lead hit a record peak on concerns over Chinese output. Copper for three months delivery on the London Metal Exchange closed at $7,725 a tonne, up $15 from the close on Monday. Earlier it touched $7,805 - its highest since May 14.
In New York, copper for September delivery settled up 1.80 cents to $3.5450 a lb at the New York Mercantile Exchange's COMEX division, its highest closing level since May 11, after dealing a session range between $3.4945 and $3.56. "The structural weakness in the dollar is providing a great springboard for price appreciation," said Michael Skinner, analyst at Standard Bank.
A weaker US currency makes dollar-denominated metals cheaper for investors in other currencies. The dollar hit a 26-year low versus sterling and hovered near a record trough against the euro.
Strike threats at Chile's Collahuasi, one of the world's largest copper mines, underpinned copper prices. Managers have made no new offer to workers who are threatening to strike over pay and conditions, the union said.
The two sides, workers and management, have to reach a deal or face a strike on July 9. Collahuasi produces about 440,000 tonnes per year of copper in cathodes and concentrate. Also in focus are stocks of copper in LME warehouses, which at around 112,000 tonnes amount to less than three days of global consumption - their lowest since October last year.
Bullish sentiment has prompted some to ask if copper could breach its record high of $8,800 set in May 2006. "We think not but with LME stocks continuing to dwindle, the dollar under pressure ... supply side disruptions ... the chances of a test of last year's highs cannot be ruled out," J.P. Morgan said in a research note.
Tight supplies are also reflected in the premium charged for material to be delivered now rather than in three months. That premium, at around $112 a tonne, is down from $127 on Monday, but it is still around the highest since July 2006.
But London-listed copper miner Antofagasta said the refined copper market will move into a 200,000-tonnes surplus in the second half of the year. Worries about future supplies are behind lead's meteoric 70 percent rise this year to a record high of $2,790 a tonne on Tuesday. Traders say most of the rise has been fuelled by speculators betting on supply shortages, worries about which were triggered by shipments delays from the Magellan mine in Western Australia, owned by Canada's Ivernia earlier this year.
That was then reinforced by news that China in May exported less refined lead, mainly used to make batteries. The market closed at $2,770, down $10. Aluminium, used in construction, transport and packaging, was at $2,746 a tonne from $2,757. News that Rio Tinto allocated $1.8 billion to boost alumina production in Australia was an endorsement of strong aluminium prices, analysts said.
Rio's stock was up 0.7 percent, while London-listed miner Lonmin hit an all-time high earlier and closed up 3.1 percent as traders cited continued market talk linking fellow miner Xstrata with a possible bid. Shares in Xstrata gained 1.5 percent.Nickel ended at $36,295/36,300 versus $35,900, zinc was at $3,420, down from $3,460, and tin closed at $13,825 from $13,875/13,900.