Copper rose to its highest in more than three weeks on Wednesday after a powerful earthquake off the coast of top miner Chile triggered a tsunami alert, raising concerns about supply. Copper prices jumped 1 percent on reports of the major earthquake near the mineral-rich north of Chile. But most mines in quake-prone Chile, which supplies aground a third of the world's copper, are designed to withstand tremors and the price of the metal retraced a little.
The Collahuasi copper mine and port did not report any damage, but some workers were evacuated and several ports that ship metals from the country remained closed, suggesting trade flows might be temporarily interrupted. Three-month copper on the London Metal Exchange, untraded at the close, was last bid at $6,675 a tonne after hitting $6,734, the highest level since March 10. It closed at $6,660 on Tuesday. "Copper came off fairly quickly as the news flow suggested that no copper mines have been affected," Citi analyst David Wilson said.
Last month, China's first domestic bond default shook the foundations of the metals market, sending LME copper to its lowest in more than three years because the default stoked investor worries that financing deals that have locked up vast quantities of copper could unravel.
The metals markets saw the default as a sign of tighter credit to come for users of metals and for financiers who have employed the metal as collateral for borrowing. Copper prices have been slowly recovering since then. There may also be room for copper to make more gains this week after Friday's non-farm payroll report, which should shed fresh light on the state of the US economy. "The stock market hit record highs. US data improved. Copper is not only driven by what is going on in China," said analyst Mark Keenan of Societe Generale in Singapore.
Persistent weakness in China's manufacturing sector has reinforced fears of a sharper-than-expected slowdown at the start of 2014, and some government economists think authorities have already started boosting spending to put a floor under growth, which has lent support to copper prices. LME benchmark aluminium closed at $1,828 per tonne. It hit an intraday high of $1,830, the highest since late December. It closed at $1,796 on Tuesday.
Aluminium prices have been volatile since a British court ruling last week halted a warehousing reform of the LME, falling initially in response to the news and then reversing losses. Citi's Wilson ascribed the aluminium price moves more to Commodity Trade Advisors (CTA) activity - automatic order-led trading - than to fundamentals. LME benchmark zinc closed at $1,970 a tonne from $1,965 at the close on Tuesday, lead at $2,060 a tonne from $2,047, and nickel at $16,185 from $16,025. Tin, untraded at the close, was last bid at $22,900 from $22,950.
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