US copper futures settled at a one-week high on Wednesday, garnering strength from a firmer base metals complex in London and a production halt at a major Chilean mine, traders and analysts said.
Copper for May delivery closed up 6.85 cents or 2.5 percent at $2.7820 a lb on the New York Mercantile Exchange's Comex division, its best settlement since February 27, after ranging from $2.7125 to $2.7925. Spot March advanced 7.10 cents to $2.7720, while deferred or back month contracts ended firm, from 5.85 cents to 6.75 cents higher.
Final estimated copper futures volume amounted to only 4,000 lots against the 7,203 lots recorded on Tuesday. As of March 6, open interest in Comex copper futures rose 391 lots to 65,495 contracts. Gains on the London Metal Exchange (LME) were seen giving copper futures in New York a boost at the open. James Quinn, commodity commentator with A.G.
Edwards, said Comex copper was worth about 2.70 cents higher at the open on Wednesday based on the London arbitrage, and that the rise in nickel prices was supporting the interest in the copper. "I think there is a certain optimism underpinning the copper because the other base metals are doing well," Quinn said.
Nickel surged nearly 5 percent to a new record high of $42,350 a tonne as tight supply triggered the speculative buying. The rest of the base metals complex followed suit as wary investors returned to recovering financial markets after the recent sell-off.
Edward Meir, metals analyst with Man Financial, said a fire overnight at Codelco's 300,000 tonne-per-year Radomiro Tommie mine in northern Chile seemed to have a belated affect on copper markets on Wednesday. "As the news settled in, you could see prices gradually tick higher in the Far East, and then they took off today," Meir said. Codelco said the fire broke out in an electricity substation on Friday, March 2, halting output.
However, the state-owned company said it hoped to fully restore the supply within 15 days, but did not say when output would be fully restored. Meanwhile, miners at Zambia's Lunacy Copper Mines (LCM) ended a six-day strike on Wednesday after management reinstated workers it had sacked, a senior union official said.
A large drawdown in LME copper warehouse stockpiles contributed to the gains on Wednesday, traders said. Stocks fell by 2,400 tonnes to 203,650 tonnes on Wednesday, while Comex stocks were unchanged at 36,994 short tons on Tuesday. LME three-month copper closed at $6,140 a tonne, up $175 from Tuesday's kerb close.