The base metals, except for nickel, were all in the black on Friday. Copper started up in the pre-dawn hours and peaked around mid-morning at nearly $3.87, but then dropped off before finishing in positive territory at $3.8335/lb., up 4 cents.

Nickel rose in the pre-dawn hours, poking through the $10 barrier again, but again fell off from there to close at its intraday low of $9.6524/lb., down less than 3 cents. Zinc was up in the pre-dawn hours and held onto its gains through the day, ending at $0.9092/lb., up more than 3¾ cents. Aluminum hit $1.50 in the pre-dawn hours, and again at mid-morning, but failed to hold there, dropping to $1.4767/lb., up 3 cents, while lead rocketed past $0.92 early and stayed in the black despite a steep morning drop, adding 2 cents, to $0.882/lb.

Except for nickel, the industrial metals were well supported yesterday, benefiting from credit crisis fears on the one hand, and potential supply deficits on the other.

“For the moment supply disruptions and a feeling that consumers are generally running with low stocks and therefore are vulnerable to higher prices and may end up chasing the market higher seems to be driving sentiment,” said Basemetals.Com analyst William Adams.

Copper inventories monitored by the LME were off 725 metric tons, to 124,125 tons yesterday, and stocks are down 37% so far this year.

Freeport-McMoRan Copper & Gold Inc.’s (NYSE:FCX) Peruvian copper-mine workers are still planning to go on strike July 16. That follows earlier unrest in Latin America this year, which has affected production in Peru, Chile and Mexico.

Wednesday’s announcement by China producers that they’re cutting output by 5-10% was still being felt, although many were downplaying it.

“Estimates of 1 million metric tonnes of lost [aluminum] production are plainly ridiculous as this assumes that this capacity reduction is semi permanent,” said JP Morgan (NYSE:JPM) analyst Michael Jansen. “We would be surprised if cuts, if they happen, last more than two months as one major reason for the cuts is to reduce electricity production from polluting coal fired power stations. After the Olympics this rationale will not be convincing.”

But, in a report out of China yesterday, it appears that zinc producers may follow aluminum’s lead. Zinc smelters in the world’s largest producer of the metal will meet this weekend to consider production cuts as a response to falling prices causing losses.

Source: Base Metals Prolong Rally