US copper futures were firm in early trade on Wednesday, supported by strength in the London base metals complex and news of production problems at a major Chilean mine, traders and analysts said.
Copper for May delivery was up 5.65 cents at $2.77 a lb by 10:24 am EST (1524 GMT) on the New York Mercantile Exchange's COMEX division, ranging from an overnight low of $2.7125 to $2.7715.
Spot March gained 4.70 cents to trade at its morning peak at $2.7480. Copper futures volume by 10:00 am was estimated at 1,500 lots. "I think there is a certain optimism underpinning the copper because the other base metals are doing well," said James Quinn, commodity commentator with A.G. Edwards on the floor of the exchange.
Nickel rose 4 percent on the London Metal Exchange (LME) on Wednesday to match last week's record high at $42,200, as tight supply triggered further speculative interest. Nickel stocks in LME warehouses fell 162 tonnes to 3,648 tonnes on Wednesday, of which around 40 percent were unavailable for delivery.
Breaking news overnight of production problems from a fire at Codelco's Radomiro Tomic copper mine supported the early buying, but the company said the electricity supply was being restored and that production was "recovering gradually."
The state-owned company said it hoped to fully restore the supply within 15 days. It did not say when output would be fully restored. Radomiro Tomic accounts for around one-sixth of Codelco's total copper output. Meanwhile, miners at Zambia's Luanshya Copper Mines (LCM) ended a six-day strike on Wednesday after management reinstated workers it had sacked, a senior union official said.
Traders were also keeping an eye on the volatile energy markets, as US crude oil futures were edging higher in anticipation of government inventory data expected to show a decline in refined product stocks. Another large drawdown in LME copper warehouse stockpiles added to the morning upside.
Stocks fell by 2,400 tonnes to 203,650 tonnes on Wednesday, while COMEX stocks were unchanged at 36,994 short tons on Tuesday. Although stocks of copper are still at historically low levels, they are no longer at the critically low levels of August 2005. Inventories in LME warehouses rose by nearly 90 percent between September 2006 and January 2007.