Copper Rebounds From One-Month Low on Force Majeure at Grasberg
Copper rebounded from a one-month low after Freeport-McMoRan Copper & Gold Inc. (FCX) declared force majeure on shipments from the world’s second-biggest mine of the metal in Indonesia. Industrial metals advanced.
Copper for delivery in three months on the London Metal Exchange rose as much as 1 percent to $7,190 a metric ton and was at $7,156.75 by 11:33 a.m. in Tokyo. The price touched $7,020 yesterday, the lowest since May 3. Metal for delivery in July on the Comex was little changed at $3.227 a pound.
Freeport declared force majeure on copper concentrate shipments from its Grasberg operation after an accident on May 14 killed 28 workers. Force majeure is a clause in a contract invoked by commodity suppliers when they can’t meet obligations because of circumstances beyond their control.
“It’s a big producer of copper and that would definitely have an impact on supply,” said David Lennox, an analyst at Fat Prophets in Sydney. “The market is scrambling for copper in the event that Grasberg stays closed for a long period of time.”
The stoppage at Grasberg is reducing output by about 3 million pounds of copper (1,361 tons) and 3,000 ounces of gold a day, Freeport said yesterday. That’s equal to about 2.9 percent of average daily global copper output this year, according to data compiled by Bloomberg. The Indonesian unit lost about 80 million pounds of copper and 80,000 ounces of gold production between May 15 and June 11, the company said.
Copper for delivery in October on the Shanghai Futures Exchange retreated 2.3 percent to 51,850 yuan ($8,447) a ton as the trading resumed after a three-day holiday.
On the LME, nickel climbed for the first time in seven days. Yesterday it fell to the lowest since July 2009 after data from the bourse showed stockpiles rose to a record. Lead, tin, aluminum and zinc climbed.
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