The base metals were mostly higher on Tuesday. Copper pushed higher in the pre-dawn hours, but then dropped in New York, rallying slightly at the end to finish at $3.7897/lb., down a bit less than a penny.

Nickel rose slowly but steadily until mid-morning then went flat, closing at $12.1899/lb., up 15¾ cents. Zinc broke past $1 in the pre-dawn hours and continued higher, leveling off around noon at $1.0378/lb., up more than 6 cents. Aluminum had some sharp ups and downs to little ultimate effect as it gained less than a tenth of a cent, to $1.31/lb., while lead continued its comeback for a second straight day, adding 2¾ cents, to $1.0399/lb.

Copper traders continued to schiz out, vacillating between concerns over the stronger dollar on the one hand, and potential supply disruptions on the other.

Even though a nationwide miners’ strike in Peru was postponed for 15 days in order to allow for further negotiations, the market is still casting a wary eye on developments in that key metal producer.

“[Peru] is the world’s largest silver producer, and produces significant amounts of zinc and copper, consequently strike action could lead to higher prices for these metals,” said Fairfax analyst John Meyer.

To the south, in Chile, fears that recent strikes at Codelco plants could be resumed have been stoked after the Supreme Court ruled the state mining giant does not have to offer thousands of subcontractors full-time positions.

Subcontractors had agreed to end their 3-week strike on May 5 after a pledge from Codelco to make many of them full-time, and to pay a bonus.

Union leaders have already begun a hunger strike, saying that Codelco still has not acted upon the pledges it made last week.

Meanwhile, zinc’s gain yesterday was the steepest in 2½ months, as speculators placed bets that that the earthquake in China, the world’s largest producer of the metal, might put some curbs on production. As much as 11% of the nation’s smelting capacity, or some 500,000 tons, was probably affected by the quake, Reuters reported.

Disruption in China came on the heels of a strike at Skorpion’s zinc mine in Namibia, Africa’s largest. “The strike at the Skorpion mine and uncertainty over zinc production in China’s Sichuan province are now adding a new facet to what is becoming a very interesting story,” wrote RBC Capital Markets analysts.

Still, Max Layton, an analyst at Macquarie Group in London, isn’t pushing the panic button. Any impact from the earthquake “would be very small,” he said. The bank forecast a zinc surplus of 88,000 metric tons this year, rising to 202,000 tons in 2009 as new mines come on line.

Source: Industrial Metals Mostly Higher