Copper descends

09 Aug, 2006

Copper futures ended lower on Tuesday as expectations of slower economic growth dominated sentiment, while the threat of supply shortages was mostly sidelined ahead of a decision by the US Federal Reserve.
Three-month copper futures ended $40 a tonne down at $7,890 on the London Metal Exchange. Trading ranged between $7,930 and $7,735, but for most of the European day prices stayed between $7,800 and $7,900.
"There was never likely to be large moves ahead of the Fed's decision," said Stephen Briggs, an analyst at SGCIB.
"There are two conflicting trends ... One is endless supply disruptions ... On the other side is incontrovertible evidence of significant slowing ... in the United States."
The United States accounts for more than 30 percent of global economic growth and forecasts of a slowdown have been a major reason for price falls in metals markets since May.
But that has been partly offset by accidents and strikes.
The latest is a strike which started on Monday at Chile's Escondida - the world's largest copper mine, accounting for 8 percent of global production.
BHP Billiton, which owns 57.5 percent of Escondida, declared force majeure on delivery of copper concentrates. Workers said they expect the company to contact the union on Tuesday to resume salary talks.
Before the strike, Escondida was expected to produce 3,500 tonnes of copper a day this year. A spokesman said that about 60 percent of the mine's output was affected.
Copper stocks in LME registered warehouses stand at 102,675 tonnes, little more than two days of global consumption.
"The question is how long will the Escondida strike last," a LME trader said. "Strikes in Chile have a habit of being short, (but) what's to say this won't be an exception."
Nickel closed unchanged at $26,100. Aluminium added $10 to end at $2,565, tin lost $25 to $8,425, zinc shed $5 to $3,415, while lead rose $25 to $1,185 on speculative buying.

Read Comments