Copper Advances on Speculation Mine Strike May Cut Into Supply
Copper rose for the first day in three in New York on speculation that supply may tighten further as a strike at the world’s fourth-biggest mine continues.
Anglo American Plc and Xstrata Plc’s Collahuasi venture in Chile said it will ignore union calls to resume wage talks and keep negotiating directly with workers in a bid to end the strike, which helped drive copper to a record this month. Prices also gained after the International Copper Study Group said the market’s supply shortfall jumped almost eightfold.
“The supply situation could tighten in the short term if the strike at Collahuasi does not end soon,” Commerzbank AG said in a report.
Copper for delivery in March added 4.4 cents, or 1.2 percent, to $3.755 a pound at 8:57 a.m. on the Comex in New York. Copper for delivery in three months climbed 1.3 percent to $8,245 a metric ton on the London Metal Exchange. All of the six main metals traded on the LME gained, led by nickel.
Acceptances of Collahuasi’s offer have fallen short of the required 756, from the 1,551-strong union, to dissolve the strike under Chilean law, threatening to prolong the action.
World copper consumption exceeded output by 363,000 tons in this year’s first eight months, compared with a 47,000-ton shortfall a year, the ICSG said last night by e-mail. Usage outpaced supply by 19,000 tons in August, it said.
“Demand recovery momentum continued to pick up pace, with usage jumping 13% year-on-year (up from 6% the previous month), above our expectations and continuing this year’s trend of upside demand surprises,” Barclays Capital said in a report.
Copper also gained as German business confidence unexpectedly rose to a record in November and Europe stocks and U.S. index futures gained. The Munich-based Ifo institute said its business climate index rose to 109.3, the highest level since records for a reunified Germany began in 1991. Economists predicted a decline to 107.5.
The metal fell in the past two sessions as the dollar gained amid concern about Europe’s sovereign-debt crisis. A stronger dollar makes metals priced in the currency more expensive in terms of other monies. Copper also slid on concern demand may wane as China moves to limit inflation.
“Prices could fall below $8,000 over the near term, given the potential for further risk in peripheral Europe and the strong likelihood that China moves again to raise reserve requirements or interest rates before the end of the year,” said Daniel Brebner, an analyst at Deutsche Bank AG in London.
Immediate-delivery LME copper’s premium to the three-month contract jumped 15 percent to $32.25 a ton today. Prices moved on Nov. 8 to a so-called backwardation, when nearby metal trades above longer-dated contracts, potentially indicating concern about near-term supply.
Copper stockpiles tracked by the LME slid for a 14th day to 357,125 tons today, the lowest level since Oct. 19, 2009, daily exchange figures showed. Orders to draw copper from LME inventories, or canceled warrants, dropped 1.9 percent to 31,725 tons.
Tin for three-month delivery on the LME rose 2.1 percent to $24,400 a ton. Prices reached a record $27,500 on Nov. 9. The metal has jumped 44 percent this year, leading advances on the exchange, after production was disrupted in Indonesia and the Democratic Republic of Congo.
Aluminum rose 0.6 percent to $2,268 a ton and nickel climbed 2.5 percent to $22,145 a ton. Lead gained 1.8 percent to $2,225 a ton and zinc added 1.4 percent to $2,115 a ton.
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