Zinc, Lead Rise in London After Australia's CBH Cuts Production

By Claudia Carpenter

Nov. 7 (Bloomberg) -- Zinc and lead rose on the London Metal Exchange after Australia's CBH Resources Ltd. announced output cuts because of weaker demand. Copper also advanced.

Ore production will be cut by 30 percent to 658,000 metric tons in the year ended June 30, 2009, and to 420,000 tons the following year, Sydney-based CBH said. Nickel, aluminum and zinc have led production cuts planned for next year, Barclays Capital said in a report yesterday.

``We are seeing some significant supply side adjustments occurring in some of the metals which should help support metal prices,'' David Moore, a commodity strategist at Commonwealth Bank of Australia, said in an interview from Sydney.

Zinc for delivery in three months jumped $31, or 2.8 percent, to $1,129 a ton as of 9:04 a.m. in London and lead rose $31, or 2.1 percent, to $1,490 a ton.

Zinc producers since August have announced 2009 production cuts of 511,000 tons, or 4.2 percent of total output, and 96,000 tons of lead, or 1.1 percent of global production, according to Barclays. Lead prices will climb in the first quarter of 2009 to $1,500 a ton on average from $1,350 a ton in the fourth quarter this year while zinc climbs in the second quarter to $1,200 a ton from $1,100 a ton in the first quarter, the banks said.

``Short-term fundamentals for the lead market are strong, in our view, with the market likely to remain in a small deficit through the rest of the year,'' Barclays said.

Copper rose $102, or 2.7 percent, to $3,907 a ton. Prices have dropped $199, or 4.9 percent, this week. Aluminum increased $6 to $2,045.

Stockpiles of copper in warehouses monitored by the LME gained 2,250 tons, or 0.9 percent, to 254,800 tons, the most since March 10, 2004. Aluminum inventories fell 400 tons, or less than 0.1 percent, to 1.54 million tons.

Nickel gained $395 to $11,800 a ton and tin jumped $250 to $14,250 a ton.

To contact the reporter on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net or ccarpenter2@bloomberg.net