Base metals markets were steady on Thursday, as copper prices in Shanghai and London drifted, but supply concerns were uppermost on investors' minds. The most-active September copper contract on the Shanghai Futures Exchange was up 50 yuan at 64,830 yuan a tonne.
Copper for delivery in three months on the London Metal Exchange was $10 lower at $7,500, after rallying 1.1 percent on Wednesday. "Copper looks to be basing out at around $7,500. There are a few stops at $7,490, and if it get down towards there, they might be some selling," a dealer in Sydney said.
He added: "All the ingredients are there for prices to move higher. Volumes are thin, there are strikes in the background, and stocks are very low." Workers at Chile's Collahuasi in Chile, one of the world's largest copper mines, have set a strike vote for June 27, barring an improved wage offer from the company. At other Codelco operations, sub-contractors plan to meet on Thursday to give the final go-ahead to a strike across Codelco's five divisions and in Peru, workers at Southern Copper's two copper mines and a smelter plan to strike from June 23.
LME lead was at $2,500 hovering, just shy of Wednesday's record peak of $2,525 touched in late electronic dealing. Lead closed at $2,511 after rallying 4.6 percent.
"Lead could still go higher. There is so much money behind it adding to concerns about Chinese exports," said Michael Wider, an analyst at Clayton Corporate and Investment Bank. The world lead market was in deficit by 4,000 tonnes in January-April, the latest monthly bulletin from the International Lead and Zinc Study Group (ILZSG) showed.
That has been reflected in LME stocks, which have fallen more than 10 percent since mid-May to 43,175 tonnes, around two days of global consumption. "We are hearing that there is some fund buying but producers are refusing to sell," the Sydney dealer said. "There are two major issues facing lead: Magellan and the tax changes in China. People see exports drying up from China and the problems shipping lead concentrate out from Magellan going on for a long time.
Chinese lead exports have fallen 56.6 percent to 87,254 tonnes in the first four month's of the year, while a 10 percent tax on exports is likely further cut down on trade. Shipments of lead concentrate through the port of Esperanto in Western Australia were suspended this year on environmental grounds.
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