Copper Heads for Weekly Advance Before U.S. Employment Figures

Copper headed for the first weekly advance in four weeks in New York before a report that may indicate a strengthening economy in the U.S., the world’s second-largest consumer of the metal.

An increase in November payrolls probably pushed U.S. job gains past the 1 million mark for the year, economists said. Copper added 5.6 percent this week as reports showed stronger manufacturing in China, the U.S. and Europe and inventories tracked by the London Metal Exchange shrank for a 41st week in a row.

“The market is just on hold ahead of U.S. payrolls today,” said David Thurtell, an analyst at Citigroup Inc. in London.

Copper for delivery in March slipped 0.4 cent, or 0.1 percent, to $3.975 a pound at 7:47 a.m. on the Comex in New York. Copper for delivery in three months lost 0.1 percent to $8,710 a metric ton on the LME. All of the six main metals traded on the LME retreated except nickel.

The payroll figures are due at 8:30 a.m. New York time. They will show that employment increased by 150,000 last month, according to the median forecast of 87 economists surveyed by Bloomberg News, bringing the gain so far this year to 1.02 million.

‘Blue Skies’

“The monthly nonfarm payroll report in the U.S. will either confirm the optimism that positive economic reports have helped build this week, in which case it really is clear blue skies into the end of year, or a disappointing number will cut the rally short,” said Chris Weafer, chief strategist at UralSib Financial Corp. in Moscow. “Investors are, however, clearly in the mood for a strong end to 2010.”

Separate figures due at 10 a.m. New York time may show that service industries, which account for almost 90 percent of the U.S. economy, expanded last month at the fastest pace since May as more jobs and rising wages boosted holiday sales.

LME copper inventories fell 0.9 percent this week to 353,625 tons. They’re down 30 percent this year, on course for the first annual decline since 2004. Stocks monitored by the Shanghai Futures Exchange declined for a second week, the bourse said today.

Immediate-delivery LME copper’s premium to three-month metal fell for a second day, dropping 8.3 percent to $50 a ton after reaching $74, the highest level since October 2008, on Dec. 1. Prices moved on Nov. 8 to a so-called backwardation, when nearby metal trades above longer-term contracts, potentially signaling supply concern.

Borrowing Fee

Tightness in the copper market “eased a lot” yesterday, Citigroup’s Thurtell said.

The fee to borrow copper for next-day delivery, the so-called tom-next spread, was last at a discount of $1.75, compared with yesterday’s closing $4 discount. An increase in the fee would indicate tightening supply.

An unidentified party held between 50 percent and 79 percent of LME copper stockpiles from Nov. 22 through at least Dec. 1, the latest exchange data show. Another unidentified firm held the same amount of LME nickel stockpiles on Dec. 1.

Wage talks at Anglo American Plc and Xstrata Plc’s Collahuasi mine in Chile are set to extend into a fifth day as union and company representatives seek to end a strike at the world’s third-biggest copper mine, a union leader said yesterday. The strike entered its 28th day yesterday, the longest recorded at a major Chilean copper mine.

Tin for three-month delivery on the LME slid 0.6 percent to $25,400 a ton. Prices reached a record $27,500 on Nov. 9. The metal has jumped 50 percent this year, leading advances on the exchange, after production was disrupted in Indonesia and the Democratic Republic of Congo.

Aluminum fell 0.2 percent to $2,343 a ton and nickel was unchanged at $23,650 a ton. Lead dropped 0.3 percent to $2,367 a ton and zinc declined 1.4 percent to $2,228 a ton.

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