Copper moves higher

01 Dec, 2010

Copper rose on Tuesday, supported by persistent concerns about supply tightness and as the euro trimmed losses after US data lifted risk sentiment. Benchmark copper for three-month delivery on the London Metal Exchange closed at $8,360 a tonne from $8,220 at the close on Monday. The metal, used in power and construction, had peaked earlier in the day at $8,408, its highest in a week.
"The euro trimming losses is clearly an issue. For copper, everyone is focusing on the supply issue for next year and expected deficit," Societe Generale analyst David Wilson said. Chile's Collahuasi, the world's No 3 copper mine, said on Tuesday its operations were normalising as it resumed talks with union leaders to end a strike that appears headed into a fourth week.
Worries about nearby copper supplies have pushed the premium or backwardation for cash material over the three-month contract to around $50 a tonne - its widest backwardation since October 2008. A looming deficit in the copper market is expected to push copper prices next year above the record high of $8,966 hit earlier this month. Bolstering this outlook, LME copper stocks have fallen steadily since February, last down 800 tonnes to 355,750 tonnes - their lowest since October 2009.
Aluminium closed at $2,275 versus $2,270. LME stocks for the metal, used in transport and packaging, jumped 6,800 tonnes to 4.28 million tonnes. Aluminium supply tightness may also be within sight, as a large portion of LME aluminium stocks are tied up in finance deals. Steel-making ingredient nickel closed at $23,050 a tonne from $22,400, while battery material lead was at $2,230 a tonne from $2,188.
China's nickel demand has fallen in the past month since power cuts in some provinces slowed operations at stainless steel mills, the biggest user of the commodity, trade and producer sources said. Zinc closed at $2,112 a tonne from $2,078 and tin, used in electrical solder, ended at $24,495 from $23,900. The premium for tin cash material over the three-month contract was around $7 a tonne from a discount of around $47 a tonne in early November.

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