LEAD PRICES RISE ON FINELY BALANCED PHYSICALS Lead prices have risen this week against a background of a finely balanced physical sector, traders said. Further gains are possible if the USSR steps up its buying or if labour problems develop in North America, they added. London Metal Exchange (LME) prices are unusually buoyant at a time of year when seasonal demand is normally slackening and prices tending to drift lower. This buoyancy is generally attributed by traders to the low level of LME stocks and steady, if unspectacular, physical demand in the Northern Hemisphere finding supplies curtailed. The supply problems are not new but are beginning to be felt by a market in which, as peak winter demand tails off, stocks usually build fast and availability increases, traders said. The lower supply levels result from a number of different factors around the globe. Delayed shipments from Peru to Mediterranean countries because of production and transport problems, lack of Spanish exports since the closure last year of Cia La Cruz's smelter at Linares and lower output in Morocco and Greece have all meant additional demand being directed to merchants who in turn have been drawing on LME stocks. In addition Broken Hill Associated Smelters' Port Pirie, South Australia, smelter is halting production for five weeks for maintenance. Although the company said it would meet commitments, this will put further pressure on stocks. And the U.S. Company Doe Run has kept its 140,000 tonnes per year Boss, Montana smelter closed. This cut producer stocks and contributed to a closer supply/demand balance within the U.S. Market, for many years depressed by surplus production and a regular supplier to the world market. Mexican supplies, which have sometimes swelled LME stocks, have been normal but are finding ready buyers, traders said. On the demand side, winter battery manufacture has held up quite well and some U.S. Buying of lead sheet has been reported in the U.K. Soviet lead buying, notably absent in Europe in the first two months of the year, was resumed when a large buying order was filled by merchants in March. Merchant demand has fuelled the rise in LME lead prices this week and has seen cash metal move above 320 stg and establish a premium of around 10 stg over three months delivery. Specific demand has been directed towards metal in Gothenburg and Trieste warehouses. Gothenburg material is often a target for merchants shipping to the USSR, traders said. On stocks, the popular LME Continental warehouses, Antwerp and Rotterdam, have little more than 3,000 tonnes of lead each, and this is believed to be in strong hands. Out of a total 22,125 tonnes in LME stocks, the lowest level since June 1980, just over half is in U.K. Warehouses which are not popular with merchants putting together shipments. But even U.K. Stocks have dropped around 6,000 tonnes since the start of the year. Traders said this is partly due to secondary smelters buying ingots to supplement feed supplies affected by environmental controls, which put restrictions on the transport of used batteries. Labour negotiations in North America will play an important part in determining the direction of prices, with contracts expiring end-April at Cominco's Trail and Kimberley, B.C., Mine/smelter and at Doe Run's Herculaneum, Mo, smelter. Noranda's New Brunswick mine/smelter also has a contract expiry in July which may cause some nervousness in view of strikes by its zinc and copper workers over recent months. Traders said LME three months delivery, already attracting speculative buying, could rise to 320/330 stg on current firmness, while nearby tightness could widen the cash premium to 20 from four. Three months was quoted at 313 stg at midsession.