The base metals were mostly in the red on Tuesday. Copper peaked shortly after the New York open, but sagged from there, only to rally late in the day to return from whence it came, finishing at $3.7923/lb., down two-tenths of a cent.

Nickel fell, but not that dramatically, as it closed just off its intraday low at $9.1822/lb., down less than 4¼ cents. Zinc pushed to near $0.86 in the pre-dawn hours, but faded, ending at $0.8263/lb., down just over a penny. Aluminum slipped to $1.3505/lb., also off just over a penny, while lead shot straight up in the pre-dawn hours, then held its gains, adding better than 4 cents, to $0.9708/lb.

Copper was sluggish, but held its ground amid supply worries.

Demand exceeded output by 108,000 metric tons through April of this year, as mine production fell in Australia, Indonesia and Chile, the International Copper Study Group said.

Additionally Freeport McMoRan, the second-biggest producer, said copper sales this year will be 2.4% less than projected in April, citing output declines. The company cited production delays at its new Safford mine and output at the Morenci pit that trailed expectations. Both sites are in Arizona.

Richard Adkerson, Freeport’s CEO said that the “copper market continues to be tight” and that mining companies are “challenged” to meet production targets. Adkerson claimed that higher production costs, especially for fuel, have created a “barrier” to increasing mine output.

Small wonder that analysts at Barclays Capital (BARC) in London were writing that, “The picture for copper supply growth remains bleak.”

Meanwhile lead, which had been in the doghouse for ever so long, has been showing definite signs of new life on supply concerns and some sentiment that the selloff may have been overdone. Lead inventories monitored by the LME fell 650 tons yesterday, to 91,375 tons. They’re down about 10% since July 9.

Chinese exports of refined lead dropped 96% in June and 80% over the first half. “Net lead exports to the west from China were at their lowest this decade in June,” said Nick Moore, of ABN AMRO. “China is the largest producer and consumer of lead so anything out of there tends to feed in quite quickly.”

And Alex Heath, of RBC Capital Markets noted that, “Lead consumption is growing on demand for batteries in both India and China … The car industry as a whole, in terms of western producers, is flagging, but people still need new batteries for their old cars.”

Source: Base Metals Mostly Lower, but Lead is on a Tear as Inventories Skid