LEAD PRICES RISE ON FINELY BALANCED PHYSICALS
  Lead prices have risen this week against
  a background of a finely balanced physical sector, traders
  said.
      Further gains are possible if the USSR steps up its buying
  or if labour problems develop in North America, they added.
      London Metal Exchange (LME) prices are unusually buoyant at
  a time of year when seasonal demand is normally slackening and
  prices tending to drift lower.
      This buoyancy is generally attributed by traders to the low
  level of LME stocks and steady, if unspectacular, physical
  demand in the Northern Hemisphere finding supplies curtailed.
      The supply problems are not new but are beginning to be
  felt by a market in which, as peak winter demand tails off,
  stocks usually build fast and availability increases, traders
  said.
      The lower supply levels result from a number of different
  factors around the globe.
      Delayed shipments from Peru to Mediterranean countries
  because of production and transport problems, lack of Spanish
  exports since the closure last year of Cia La Cruz's smelter at
  Linares and lower output in Morocco and Greece have all meant
  additional demand being directed to merchants who in turn have
  been drawing on LME stocks.
      In addition Broken Hill Associated Smelters' Port Pirie,
  South Australia, smelter is halting production for five weeks
  for maintenance. Although the company said it would meet
  commitments, this will put further pressure on stocks.
      And the U.S. Company Doe Run has kept its 140,000 tonnes
  per year Boss, Montana smelter closed. This cut producer stocks
  and contributed to a closer supply/demand balance within the
  U.S. Market, for many years depressed by surplus production and
  a regular supplier to the world market.
      Mexican supplies, which have sometimes swelled LME stocks,
  have been normal but are finding ready buyers, traders said.
      On the demand side, winter battery manufacture has held up
  quite well and some U.S. Buying of lead sheet has been reported
  in the U.K. Soviet lead buying, notably absent in Europe in the
  first two months of the year, was resumed when a large buying
  order was filled by merchants in March.
      Merchant demand has fuelled the rise in LME lead prices
  this week and has seen cash metal move above 320 stg and
  establish a premium of around 10 stg over three months
  delivery. Specific demand has been directed towards metal in
  Gothenburg and Trieste warehouses. Gothenburg material is often
  a target for merchants shipping to the USSR, traders said.
      On stocks, the popular LME Continental warehouses, Antwerp
  and Rotterdam, have little more than 3,000 tonnes of lead each,
  and this is believed to be in strong hands.
      Out of a total 22,125 tonnes in LME stocks, the lowest
  level since June 1980, just over half is in U.K. Warehouses
  which are not popular with merchants putting together
  shipments.
      But even U.K. Stocks have dropped around 6,000 tonnes since
  the start of the year. Traders said this is partly due to
  secondary smelters buying ingots to supplement feed supplies
  affected by environmental controls, which put restrictions on
  the transport of used batteries.
      Labour negotiations in North America will play an important
  part in determining the direction of prices, with contracts
  expiring end-April at Cominco's Trail and Kimberley, B.C.,
  Mine/smelter and at Doe Run's Herculaneum, Mo, smelter.
      Noranda's New Brunswick mine/smelter also has a contract
  expiry in July which may cause some nervousness in view of
  strikes by its zinc and copper workers over recent months.
      Traders said LME three months delivery, already attracting
  speculative buying, could rise to 320/330 stg on current
  firmness, while nearby tightness could widen the cash premium
  to 20 from four. Three months was quoted at 313 stg at
  midsession.
  

