Copper declines

Copper fell on Wednesday after China raised interest rates and Moody's downgraded Portugal's debt to "junk", but supply disruptions at some of the world's top copper mines kept a floor under prices. Three-month copper on the London Metal Exchange closed at $9,521 a tonne, from a close at $9,540 a tonne on Tuesday. It hit its highest since end-April on Tuesday at $9,565.
China, the world's largest consumer of copper, raised interest rates for the third time this year on Wednesday, making clear that taming inflation remains a top priority. "The market did not react particularly well to it, but there was always scope for more tightening to come through in the second half," analyst Michael Widmer of Bank of America-Merrill Lynch said. "There were comments recently from Chinese policy makers about inflation being the key concern, so I'm not surprised really."
Supply problems in Chile and Indonesia helped limit losses. A severe winter storm has hit operations at Collahuasi, the world's No. 3 copper mine, with more heavy snow, wind and rain expected in Chile's copper-rich north. Workers at Codelco's El Teniente copper mine voted to ratify a company-wide, 24-hour strike for July 11 to protest against the restructuring of the state mine. Union workers at all of Codelco's six copper mines plus a refinery district are expected to approve the call to strike.
Mining operations and production at Freeport-McMoRan Copper & Gold's Grasberg mine in Indonesia have also been significantly curtailed by the second day of a seven-day strike by about 8,000 workers, union workers said on Tuesday. "It further highlights the risk to copper supply growth this year," analyst Gayle Berry of Barclays Capital said.
Copper inventories at LME warehouses continued their downtrend, latest data showed. They last fell 1,225 tonnes to 461,275 tonnes. In other industry news, Australia's no. 2 nickel miner Minara Resources said it has placed production on standby a week after the acid plant at its ore processing facility was shut down, but added that it held enough inventory to cover sales commitments.
Nickel closed at $23,380 a tonne from $23,300, but remained supported by declining inventories, which fell to their lowest since April 2009 at 105,480 tonnes. Tin closed at $26,745 from $26,250, after touching its highest in just over a month at $27,000 while zinc closed at $2,380 from $2,411 a tonne. Lead closed at $2,700 from $2,695 a tonne. It earlier hit $2,701, its highest since mid-April. Aluminium was $2,556 from $2,576 a tonne, having earlier hit a three-week high of $2,582.50.