LONDON: Lead prices hit a seven-week high on Thursday as inventories slumped amid worries about smelter shutdowns while copper and zinc rose after the London etal Exchange imposed restrictions on metal from a Russian company.
Three-month LME lead gained as much as 2.8% to $2,093.50 a tonne, its highest since Aug. 18, before paring gains and trading up 1.2% at 1040 GMT.
“The supply side shocks are just reverberating,” said Nitesh Shah, commodity strategist at WisdomTree.
“The OPEC announcement is just adding fuel to the energy crisis that was already raging. Smelters may shut down more of their operations and mining operations are going to be more difficult.”
OPEC+ agreed steep oil production cuts on Wednesday.
Nyrstar said on Tuesday it would shut its Port Pirie lead smelter in Australia for 55 days while a source told Reuters that Glencore was reviewing the sustainability of lead operations at its Portovesme plant in Italy.
Available lead inventories in LME-approved warehouses tumbled by 44% to 15,600 tonnes, the lowest in three decades, after owners of metal notified the exchange they wanted to remove their material, LME data showed on Thursday.
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The tight availability of LME stocks helped push the premium of LME cash lead over the three month contract to $38.75 a tonne, the highest since last December.
Other metals gained after the LME restricted new copper and zinc deliveries from Russia’s Ural Mining & Metallurgical Co Ural and a subsidiary following Britain imposing sanctions on its controlling shareholder, Iskander Makhmudov.
The news highlighted last week’s news that the LME was considering having a consultation on wider restrictions - whether any Russian metal should continue to be traded and stored in its system.
“While a ban on new deliveries of Russian metal into LME warehouses would not stop metal being sold directly to consumers/traders, it could make financing more complicated,” Morgan Stanley analyst Amy Sergeant said in a note.
LME copper climbed 0.9% to $7,745.50 a tonne after hitting its highest since Sept. 13 at $7,879.
Zinc was the biggest LME gainer, advancing 2.6% to $3,124 a tonne after Glencore said it will place its Nordenham zinc smelter in Germany on care and maintenance from Nov. 1.
Aluminium gained 0.5% to $2,364 a tonne, nickel added 0.3% to $22,650 and tin climbed 0.1% to $20,305.