LME nickel, lead, tin set fresh highsBy Anna Stablum LONDON, Feb...

LME nickel, lead, tin set fresh highs
By Anna Stablum


LONDON, Feb 20 (Reuters) - Nickel, lead and tin hit fresh highs on Tuesday in volatile trading on the London Metal Exchange but others softened in the absence of Chinese buyers for the Lunar New Year holiday.

Fund buying amid thin volumes pushed nickel to a new record high of $39,998 a tonne before it closed at $39,900, up $1,100 from its close on Monday. Supply of the metal, a key ingredient in stainless steel, is tight.
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"Support came from a 36 (tonne) drawdown in LME nickel stocks following nine successive days of inflows," analysts at Barclays Capital said in a market report.

The Shanghai Futures Exchange is closed for Lunar New Year from February 17 and reopens on Feb. 26.

Tin hit a fresh contract high of $13,500 before closing at $13,400, up from Monday's last quote of $13,195/13,200.

Tin stocks in LME warehouses fell by 85 tonnes to 9,995.

"With momentum funds thought to be short, there may well be room for further short-covering rallies, especially in those markets that are seeing fresh supply concerns, notably lead and tin," analyst William Adams at BaseMetals.com said in a report.

Lead ended the day at $1,825, up $45 from Monday.

It also hit a new contract high, of $1,835.

"The CTAs (Commodity Trading Advisors) love lead -- they are putting a lot of money into the market," another LME floor trader said.

Supplies are tight with no lead stocks in LME-registered warehouses in Europe, even if total stocks came in higher on Tuesday at 32,525 tonnes, up 50.

FUND MONEY

Copper closed at $5,730, down $67 from Monday and zinc was down at $3,325 against $3,390.

Copper and zinc have been the weakest performers this year, with rising stocks depressing copper sentiment and high levels of Chinese exports doing the same in zinc, a Barclays Capital report said.

"We see these trends easing in the coming weeks and with stale length in both markets having been cut back and in copper very large short positions established, the potential for a significant price recovery is building," the report said.

In New York, copper for March delivery settled down 5.85 cents at $2.5860 a lb on the New York Mercantile Exchange's COMEX division, near the bottom of its session range between $2.5635 and $2.6550.

Standard Bank said: "We may be witnessing the start of a shift in sentiment towards copper and further short covering will only support copper prices."

Aluminium closed at $2,745 against $2,783. Recent market tightness was easing, with the cash premium over three-months prices, or backwardation, around $35 per tonne versus $118 on Feb. 5. (Additional reporting by Chris Kelly in New York)