Metal Supply to Have More Influence on Prices, Barclays Says

LONDON, Oct. 13 -- Supply of industrial metals will exert more influence on prices into next year as lead and zinc face possible production disruptions, according to Barclays Capital.

    Lead will have a supply deficit for the rest of this year, analyst Nicholas Snowdon said, according to an e-mail of a presentation at a London Metal Exchange conference in London today. Mine closings, lower ore grades and project delays "point to supply troubles" for zinc, he said.

    "Specific market fundamentals, particularly in relation to evolving supply-side dynamics, are likely to be an increasingly important source of price determination as we move into 2010," Snowdon said.

    Lead faces a "risk of disruption on the supply side" even after the restarting of Ivernia Inc.'s Magellan mine in Australia, according to Snowdon. Xstrata Plc's Brunswick zinc mine in Canada will run out of supplies near the end of next year, the company's Web site shows.

    Copper, nickel and other metals have gained this year on speculation revived economic growth and government spending programs will spur demand. "Nickel and tin will need to combat emerging supply overhang," Snowdon said.

    (Source: Bloomberg)