LME copper near peak

05 May, 2007

Copper edged lower on Friday after scoring a 10-month high in the previous session, but a challenge to last May's record peak was possible later in the day or when markets on Tuesday.
Copper for delivery in three months on the London Metal Exchange was $8,130 a tonne in thin trade, down $45 from the previous close when prices climbed nearly 3 percent.
"As expected, the longs have taken advantage of limited liquidity during the Golden Week holidays in China and Japan to ramp prices higher, expecting a further short-covering rally when the Shanghai Futures Exchange re-opens next week," Semipro Metals economist John Kemp said in a note.
The LME will close for may Bank holidays on Monday and will re-open on Tuesday, along with Shanghai after its weeklong break. When Shanghai closed on Monday, July copper was 70,990 yuan ($9,213) a tonne, while LME copper was $7,725.
LME prices now are over 5 percent higher and dealers expect Shanghai to hit its 4 percent upside limit when it reopens, which in turn could prompt further gains in London.
Analyst Joel Crane at Deutsche Bank said a spike to a fresh high was possible, but the short-term direction would depend on labour talks in Peru. Workers at two of Southern Copper Corp's three Peruvian units said on Thursday they will continue their strike, even if Peru's largest union federation votes to end a national walkout that is about to enter its fifth day.
Workers at the 350,000 tonne-per-year Ilo smelter and the 160,000 tonne-per-year Toquepala mine said their walkout could continue even if the National Federation of Metallurgic and Steel Miners and the government reached an accord.
"The summer slowdown will start to kick in and the daily outflows may start to moderate. The next set of Chinese trade data may show imports are much lower, which some people in the market will read as a slowdown in demand," he said.
Countering that, tightness in the copper concentrate market was supportive of firmer prices and mine stoppages could push the market into deficit.

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