SYDNEY: London copper was perched near a two-week high on Tuesday as upcoming labour strikes at mines threatened to trim expectations for a metal surplus, while indications of a seasonal pick up in demand from top consumer China also supported prices.
The global copper market is broadly expected to move into a significant surplus next year, but supply typically falls short of estimates due to unforeseen events such as strikes and problems mining for ever-deeper and hard-to-get ore deposits.
Already, industrial action looks set to chip away at what analysts polled by Reuters expect to be a 350,000 tonne surplus next year.
Workers at Freeport-McMoRan's Indonesian copper mine will hold a one-month strike from next week and those at Peru's biggest copper mine, Antamina, plan to begin an indefinite strike from Nov. 10.
"We hear what the producers are saying in terms of what they're planning to put out, but it's the unforeseen factors such as industrial action that create (uncertainty), as we have seen in the past few days, and that's providing a little bit of support," said analyst James Glenn of NAB in Melbourne.
"Plus the physical market at the moment is still quite tight so any signs of better demand is going to see the price go up."
Three-month copper on the London Metal Exchange had edged up 0.1 percent to $6,739 a tonne by 0305 GMT, after small gains in the previous session when it hit its highest since Oct. 15 at $6,752 a tonne.
A strike at Antamina will halt total output running at about 30,000 tonnes per month.
Physical traders were unsure how the Freeport strike in Indonesia would impact the country's ore exports, with one saying many processing plants were fully stocked after the miner resumed exports in August following a seven-month halt to exports over a tax dispute.
The most-traded January copper contract on the Shanghai Futures Exchange climbed 0.6 percent to 47,460 yuan($7,762) a tonne. Manufacturing typically picks up in the fourth quarter ahead of the Christmas and New Year gift giving seasons. Markets are now eyeing the US Federal Reserve's policy meeting this week, where it will likely reinforce its stated willingness to wait a long while before hiking interest rates after a volatile month in financial markets that saw some measures of inflation expectations drop worryingly low.
In other metals, nickel lost some lustre after JP Morgan said it expected the Philippines to mine higher grades of ore and continue exporting to China, partly filling a supply gap caused by Indonesia's ban on higher grade ore exports.
"There will likely not be any sort of supply gap resulting from a Filipino ore export ban until the end of this decade at the earliest," JPM said in a research note.
JPM expects Philippine ore exports to China to leap 27 percent this year and remain consistent into 2015 and 2016.
LME nickel hit its lowest since March 4 at $14,690 a tonne on Tuesday, trimming the year's gains to 6 percent.
Comments
Comments are closed.