Copper for September delivery HGU0 on the COMEX metals division of the
New York Mercantile Exchange ended up 3.90 cents, or nearly 1.4 percent, at
$2.9160 per lb, after dealing between $2.8945 and $2.9580.

On the London Metal Exchange, benchmark copper CMCU3 was untraded at the
close but last bid at $6,410 a tonne from $6,335 at the close on Thursday.

Copper found support from the dollar, which slipped against the euro after
data showed a larger-than-expected drop in U.S. June nonfarm payrolls to
125,000, while the unemployment rate unexpectedly fell to 9.5 percent.
[ID:nN01165161] [USD/]

Donald Selkin, chief market strategist with National Securities Corp. in
New York, said the increase in private hiring gave a slightly positive tone to
the report, despite all of the negativity surrounding the headline number.

“I thought it was decent, relative to expectations … the fact that the
13,000 was out there and we came in at 83,000 in the private, to me was OK”, he
said, referring to the ADP Employer Services report on Thursday. [ID:nWEN6511]
[ID:nN02205916]

Still, recovery sentiment remained fragile, as highlighted by
below-consensus manufacturing surveys this week in the United States and China,
the world’s top two consumers of copper. [ID:nTOE66001K] [nN01108492]

Furthermore, euro zone manufacturing slowed in June to its weakest growth
rate in four months, but was unrevised from a survey estimate just over a week
ago. [ID:nSLAUHE67Q]

“Everyone knew things were slowing down a bit,” said Alex Heath, head of
base metals at RBC Capital Markets. “With cutbacks and austerity measures
imposed, nobody should be terribly surprised to see GDP shrinking or PMI
slowing down. On the other hand the numbers are still good in China.”

For graphic; here

TAX PRESSURE

Also weighing on metals was news Australia ended a damaging dispute with
global miners by dumping its “super profits” tax for a lower resources rent tax
backed by key global miners. [ID:nAUTAX]

As a result Swiss-based Xstrata (XTA.L) reinstated about A$600 million of
copper mining and exploration projects in Australia. [ID:nSYU010165]

Meanwhile, stocks in LME warehouses continued to fall. <0#LME-STOCKS>

Copper stocks dropped 2,125 tonnes to 447,300 tonnes, the lowest since
early December last year, and aluminum stocks shed 5,150 tonnes to 4.2 million
tonnes, about 220,000 tonnes below the record high of 4.64 million tonnes set
in January.

Three-month aluminum CMAL3 closed up $16 at $1,942 a tonne. Zinc MZN3
was untraded at the close, but last bid at $1,775 a tonne from $1,743 on
Thursday. Earlier, the metal used to galvanize steel, jumped more than 4
percent to $1,820.

Galvanized steel producers are estimated to account for more than 50
percent of global zinc demand, forecast at around 12 million tonnes this year.

Lead CMPB3 rose $18 to end at $1,753 a tonne, tin CMSN3 gained $280 at
$17,240, while nickel CMNI3 shed $200 to $18,800.

Metal Prices at 1805 GMT
Metal Last Change Pct Move End 2009 Ytd Pct

move
COMEX Cu 291.80 4.10 +1.43 334.65 -12.80
LME Alum 1935.00 9.00 +0.47 2230.00 -13.23
LME Cu 6445.00 110.00 +1.74 7375.00 -12.61
LME Lead 1755.00 20.00 +1.15 2432.00 -27.84
LME Nickel 18825.00 -175.00 -0.92 18525.00 1.62
LME Tin 17300.00 340.00 +2.00 16950.00 2.06
LME Zinc 1790.00 47.00 +2.70 2560.00 -30.08
SHFE Alu 14775.00 170.00 +1.16 17160.00 -13.90
SHFE Cu* 52350.00 1010.00 +1.97 59900.00 -12.60
SHFE Zin 15015.00 555.00 +3.84 21195.00 -29.16
** Benchmark month for COMEX copper * 3rd contract month for SHFE AL, CU and
ZN
SHFE ZN began trading on 26/3/07

 FUNDAMENTALS

 * Three-month copper on the London Metal Exchange CMCU3
rose $4 to $6,450 by 0132 GMT on Friday, hovering above a
one-week low of $6,410 in the previous session.

 * Shanghai's benchmark third-month copper futures contract
SCFc3 slipped 0.6 percent to 51,340 yuan a tonne.

 * New U.S. claims for jobless aid rose last week while
consumer prices notched their largest decline in nearly 1-½
years in May, suggesting interest rates will remain ultra low
to nurse the fragile economic recovery. [ID:nN17254724]

 * Meanwhile factory activity growth plummeted in the U.S.
Mid-Atlantic region in June, a survey by the Philadelphia
Federal Reserve Bank showed, adding to worries about the
vulnerable recovery in the U.S. economy. [ID:nN17165505]

 * LME copper stocks rose 1,025 tonnes to 460,175 tonnes on
Thursday, the first rise since mid-May. [MCU-STOCKS]

 MARKET NEWS

 * The euro held steady near three-week highs on Friday, as
investors liquidated short positions after a robust response to
Spanish bond auctions, while the U.S. dollar appeared
vulnerable to a sell-off.[USD/]

 * U.S. stocks edged higher late in a choppy, thinly traded
session on Thursday as investors built on momentum gained after
the S&P 500 index broke through its 200-day moving average
earlier this week. [.N]

 DATA/EVENTS

 The following data/events is expected on Friday:

 * India M3 Money Supply June  (1130 GMT)

 * U.S. ECRI weekly index     (1430 GMT)

 PRICES
 Base metals prices at 0132 GMT
 Metal         Last       Change   Pct Move  End 2009 YTD pct
chg
 LME Cu        6450.00      4.00     +0.06    7375.00
-12.54
 SHFE Cu*     51340.00   -330.00     -0.64   59900.00
-14.29
 LME Alum      1958.00     -8.00     -0.41    2230.00
-12.20
 SHFE Alum*   14520.00    -60.00     -0.41   17160.00
-15.38
 COMEX Cu**     290.25     -9.15     -3.06     332.75
-12.77
 LME Zinc      1742.00    -23.00     -1.30    2560.00
-31.95
 SHFE Zinc    14125.00   -170.00     -1.19   21195.00
-33.36
 LME Nickel   19500.00   -300.00     -1.52   18525.00
5.26
 LME Lead      1742.00    -22.00     -1.25    2432.00
-28.37
 LME/Shanghai arb^           189
 Dollar/yuan          6.8282 \ 6.8289
 ** 1st contract month for COMEX copper
  * 3rd contact month for SHFE aluminium, copper and zinc
  ^ LME 3-m copper in yuan, including 17 pct VAT, minus SHFE
third month

China’s copper imports at around 397 000 tons were slightly below forecasts, but analysts had expected a drop from April’s 436 345 tons as measures to cool growth rates and slow property speculation took hold.

Copper for three-months delivery on the London Metal Exchange was $6 425 a ton at 1415 GMT, versus $6 340 a ton on Wednesday and after hitting a session high of $6 455, its highest since Friday.

“Chinese imports are notoriously variable, it does not surprise me that they’ve pulled back a bit ahead of summer shut-downs,” he said, adding that Chinese demand would remain supportive in the longer term.

“They have cut back on speculative activity in property,” he added. “But I see China touching the breaks rather than throwing out the anchors.”

“It is still a healthy number and is reflective of the still strong underlying demand if you consider there’s destocking going on in China,” said analyst Gayle Berry at Barclays Capital.

Risk appetite across global markets looked strong, with the euro <EUR=> rising 1 percent versus the dollar. The euro was supported in part by the head of China’s national pension fund saying the currency would weather Europe’s debt crisis.

The European Central Bank kept interest rates at 1.0 percent as expected on Thursday after a torrid month in which it has abandoned resistance to buying government debt and flung its exit strategy into reverse.

A global shares rally also supported sentiment.

RATE DECISIONS

Chinese demand was the major reason copper prices more than doubled last year. The metal, used extensively in construction and wiring, has given up gains after hitting a 20-month high above $8,000 a ton in mid-April as China slowdown fears and worries euro zone economy weighed.

On the fundamentals front, which analysts say is largely being ignored by the market for the moment, inventories for copper at LME registered warehouses dropped by 1 775 tons and 7 575 tons for aluminium.

Battery material lead was at $1 696,25 a ton versus Wednesday’s $1 680 a ton while tin was at $16 700 a ton from $16 300. Aluminium was $1 964 a ton from $1 927 and nickel eased to $19 538 from $19 270.

LME zinc was at $1 770 from $1 757. Zinc, the weakest performer amongst LME metals has lost one third of its value this year, under pressure from high stocks and worries about longer term surpluses.

Surprisingly strong U.S. housing data for April drove
optimism about the economy, boosting stocks and driving up oil
prices.

The stock rally — a 2.3 percent rise for the Dow Jones
Industrial Average .DJI — also eased concerns that Europe’s
sovereign debt crisis could restrain a fragile economic
recovery.

“Investors are waking up to the positive story coming from
the United States. Shocks from Europe could knock us back
again, but ahead of the payrolls numbers, I think these markets
will be firm,” a trader in Hong Kong said.

Friday will see the release of U.S. non-farm payrolls for
June, viewed by many as the key gauge of the nation’s economic
recovery, with the market looking for an increase in excess of
500,000.

Three-month copper on the London Metal Exchange CMCU3
rallied $65 to $6,730 by 0336 GMT, and earlier touched $6,760,
reversing the previous day’s loss.

“I don’t see a strong rebound. Sentiment is cautious after
the correction in the past few weeks,” Barclays Capital analyst
Yingxi Yu said.

“Metals are still being weighed down by concerns about
China — those are probably more important than the crisis in
Europe, but growing uncertainty about the global economy may
delay Chinese efforts to slow growth and that may be positive”

On the supply side, copper’s longer term outlook saw a
boost after global miner Xstrata (XTA.L: Quote) said it has suspended
almost A$1.2 billion ($1 billion) in coal and copper mining
projects in Australia, blaming Canberra’s new mining tax.

Xstrata, which last month halted some copper exploration in
the country’s north, said on Thursday it was now suspending a
A$600 million project to expand its Ernest Henry copper mine.

Benchmark third-month Shanghai copper SCFc3 rose 560 yuan
to 53,960 yuan, but zinc SZNc3 extended losses from the
previous session, when the market hit its downside limit, to
fall 0.6 percent to 15,115 yuan.

LME aluminium CMAL3 rose 0.8 percent to $2,000 a tonne,
but technicals pointed to a slightly weaker market, targeting
$1,920 for as long as the market holds below $2,025.
[TECH/C-MET]
Base metals prices at 0336 GMT
Metal Last Change Pct Move End 2009 YTD pct
chg
LME Cu 6730.00 65.00 +0.98 7375.00
-8.75
SHFE Cu* 53960.00 560.00 +1.05 59900.00
-9.92
LME Alum 2000.00 15.00 +0.76 2230.00
-10.31
SHFE Alum* 14955.00 20.00 +0.13 17160.00
-12.85
COMEX Cu** 304.75 1.55 +0.51 332.75
-8.41
LME Zinc 1827.00 26.00 +1.44 2560.00
-28.63
SHFE Zinc 15115.00 -95.00 -0.62 21195.00
-28.69
LME Nickel 20050.00 400.00 +2.04 18525.00
8.23
LME Lead 1725.00 29.00 +1.71 2432.00
-29.07
LME Tin 17675.00 25.00 +0.14 16950.00
4.28
LME/Shanghai arb^ -181
Dollar/yuan 6.8298 \ 6.8303
** 1st contract month for COMEX copper
* 3rd contact month for SHFE aluminium, copper and zinc
^ LME 3-m copper in yuan, including 17 pct VAT, minus SHFE
third month

The Mid-Continent Project is located in southwestern Minnesota and consists of two target areas, Cottonwood and Renville West, totalling 17.8 square kilometres.

The exploration target at Mid-Continent is magmatic nickel-copper and PGE sulphide deposits.

Interestingly, the project area is located near the southern margin of the Superior Craton, which has several world class nickel sulphide deposits, as its neighbours along or near its margins in Canada (eg. Thompson, Raglan, Voisey’s Bay).

Recent nickel sulphide discoveries at Lakeview (Minnestora) and Eagle (Michigan) are located in the same general region.

MMG is the Australian headquartered base metals subsidiary of China Minmetals Corporation.

MMG will spend up to USD $4million over four years and carry US Nickel through to a Bankable Feasibility Study plus make a payment of US$100,000 upon signing the proposed Joint Venture to Lumacom Ltd.

US Nickel managing director Alex Hewlett said the Agreement heralded an opportunity for the prospect to be aggressively explored with the assistance of a mining company with significant base-metal experience, already operating in the North American region.

The Company was looking to build a strong strategic relationship with MMG.

MMG will earn a 70% stake in the Mid-Continent project currently owned 100% by US Nickel Ltd and a further 5% should it free carry US Nickel through a Bankable Feasibility Study.

Barrick, the world’s largest gold miner, agreed in October to buy a 70 percent stake in El Morro — a copper and gold project — from its owner, Anglo-Swiss miner Xstrata (XTA.L), for $465 million.

But that bid was scuttled when New Gold, the minority stakeholder in El Morro, claimed right of first refusal on Xstrata’s stake and structured a deal to sell it to Goldcorp. Barrick said in mid-January it would sue Goldcorp and New Gold, claiming the deal was structured improperly.

In a statement on Tuesday, Goldcorp said it had completed the transaction, but Barrick spokesman Vince Borg said Barrick still expects to see New Gold and Goldcorp in court.

“Fundamentally, we remain of the view that Xstrata were obliged to close with us,” he said. “Whether they closed or not, the courts will sort out.”

Barrick filed its claim in an Ontario court, even though its disagreement centers on an interpretation of Chilean law.

Toronto-based Barrick alleges New Gold and Goldcorp acted improperly when New Gold essentially transferred its right of first refusal on the stake to Goldcorp.

El Morro is an advanced stage project holding reserves of 5.7 billion pounds of copper and 6.7 million ounces of gold.

While it is more of a copper than a gold project, gold miners are increasingly embracing projects with a high proportion of base metals due to a scarcity of large pure gold projects.

Barrick hopes to realize costs savings due to El Morro’s proximity to other operations it has in the area, including its Pascua Lama project.

Vancouver-based Goldcorp, the world’s No. 2 gold miner by market value, hopes to establish a presence in Chile.

A court date has not yet been set.

Barrick shares were up 62 Canadian cents at C$39.65 on the Toronto Stock Exchange in late trade on Wednesday, while Goldcorp was up 40 Canadian cents at C$40.48. Vancouver-based New Gold was up 9 Canadian cents at C$5.08.

“I think we are still seeing some residual demand from last week,” said Catherine Virga, senior base metals analyst with CPM Group in New York.

“We are pulling up from that correction. We are seeing an uptick in physical demand across the metals due to the lower prices.”

On the London Metal Exchange (LME), aluminum peaked at $2,138 a tonne, its highest level since Feb. 3, and nickel soared to a seven-month high of $20,345 a tonne.

Copper for three-month delivery in London MCU3 closed at $7,144 a tonne, up from $6,870 at the close on Monday. The metal used in power and construction hit a session high of $7,138 a tonne, the highest since Jan. 28.

On the New York Mercantile Exchange’s COMEX division, benchmark copper for March delivery HGH0 rallied 13.9 cents, or 4.5 percent, to finish at $3.2215 per lb, its highest level on a closing basis since Jan. 27.

The euro had its biggest one-day gain versus the dollar since the end of November, as traders bet the single currency had slipped too far over fiscal worries about Greece. [FRX/]

A weaker U.S. currency makes dollar-priced commodities cheaper for holders of other currencies.

Regional manufacturing data from the United States brightened the economic outlook and bolstered the bullish momentum in the metals, analysts said. [ID:nN16372747]

Demand growth for commodities has, for some years now, been led by emerging economies such as China, the world’s largest consumer of industrial metals, which is expected to grow by more than 11 percent in the first quarter. [ID:nTOE6130AF]

Chinese markets are due to reopen next week after this week’s New Year break.

“The demand picture out of China is still robust,” said Daniel Smith, an analyst at Standard Chartered.

“Once China comes back from the New Year holidays things will pick up and this rebound is an anticipation of that.”

CONCENTRATION

Stocks of copper in LME warehouses stand at 549,900 tonnes, their highest since October 2003. That is a negative, but the market is looking at canceled warrants — material already earmarked for delivery.

Copper canceled warrants at above 16,000 tonnes from 3,625 tonnes on Feb. 8 are mostly concentrated in Korea, and analysts say this material is probably heading for China.

Canceled warrants on aluminum are at 295,175 tonnes versus 256,550 on Feb. 8, a small number compared to stocks near record highs at above 4.587 million tonnes.

But in the context of financing deals, which have tied up much of aluminum stocks, they are significant, analysts said.

Aluminum MAL3, used in transport and packaging, closed at $2,131 a tonne from Monday’s close of $2,054, while stainless steel material nickel MNI3 closed at $20,325 from $19,350.

Stocks of nickel fell to 164,856 tonnes on Feb. 15 from 166,356 on Feb. 10. Nickel prices over the same period are up about 10 percent.

Material tagged for delivery nearly doubled to 5,460 tonnes on Feb. 15, from 2,394 on Feb 8. Most of the new canceled nickel warrants were in Singapore.

Battery material lead closed at $2,298 a tonne from Monday’s last bid at $2,180, jumping nearly 6 percent to hit an intraday high of $2,308.75, its highest in nearly a month.

Zinc MZN3 was at $2,337 from $2,200 on Monday, and rose over 6 percent to hit a late-session high of $2,346. Tin MSN3 was last quoted at $16,700/16,725 from $16,495. Metal Prices at 1953 GMT Metal Last Change Pct Move End 2009 Ytd Pct

move COMEX Cu 322.10 13.85 +4.49 334.65 -3.75 LME Alum 2137.00 83.00 +4.04 2230.00 -4.17 LME Cu 7145.00 275.00 +4.00 7375.00 -3.12 LME Lead 2285.25 152.25 +7.14 2432.00 -6.03 LME Nickel 20270.00 920.00 +4.75 18525.00 9.42 LME Tin 16700.00 205.00 +1.24 16950.00 -1.47 LME Zinc 2327.00 127.00 +5.77 2560.00 -9.10 SHFE Alu 16825.00 185.00 +1.11 17160.00 -1.95 SHFE Cu* 56410.00 1020.00 +1.84 59900.00 -5.83 SHFE Zin 18345.00 270.00 +1.49 21195.00 -13.45 * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07

Haywood metals analysts increased their 2010 forecasts from $1,000 per ounce to $1,120/oz for gold, and from $15.25/oz to $17.75/oz for silver. Long-term forecasts for gold were increased from $825/oz to $850/oz while silver was upped from $12.75/oz to $13.50/oz.

“New projects in our opinion require at least US$850 per ounce for gold to generate a reasonable return on investment, and with diminishing mine lives at existing operations, declining global production, and declining ore grades, we expect gold will be well supported at the US$850-per-ounce level,” they added.

In the meantime, Haywood has “adjusted our price deck to reflect the impressive rebound in base metals prices as well as improving fundamentals going forward,” the analysts noted. “We expect strength in all the base metals over the next 1 to 3 years as the economic recovery leads to increased demand-likely in excess of existing production capacity.”

Haywood also anticipates platinum prices to head higher through 2010 to $1,550 per ounce and to $1,800/oz in 2011. ‘Healthy supply and demand fundamentals are expected to support platinum investment demand this year, as long-term investors purchase the metal in anticipation of a revival of industrial demand later in 2010.”

Meanwhile, the analysts predict that palladium’s price is expected to rise sharply throughout this year. Haywood forecasts a $450/oz price for this year and $550/0z for 2011. “We have also increased our long-term palladium price forecast to US$450 per ounce, which now commences in 2017 (from US$200 per ounce commencing in 2013 previously).”

Haywood adjusted its rhodium price forecast from $1,650/oz to $3,200/oz this year and from $1,000/oz to $4,500/oz in 2011. The long-term rhodium price was increased from $1,200 oz. to $3,000 oz, which now commences in 2017.

BASE METALS FORECASTS

Among the base metals, Haywood analysts prefer copper “given the lack of new supply, long lead time to bring on additional capacity, and general producer discipline.”

“Zinc and lead would be our next preference, and nickel would be our least favourite metal at this point,” they advised.

Although China was the only source of increased copper demand last year, improving economic activity is expected to lead to growth in global copper demand through 2010. “In the short term, we expect copper prices to remain near current levels, and have forecast a 2010E copper price of US$3.05 per pound,” the analysts forecast.

Haywood maintains a bullish outlook over the longer term, and believes the U.S.-driven sentiment for a weakening copper market will be overshadowed by global development in China, India and other emerging economies over the next two to three years. The analysts suggested copper is likely to be in a small deficit this year and next, with the market moving back into surplus in 2012.

“We are forecasting a decline in copper prices after 2011, reaching as long-term estimate of US$2.25 per pound in +2014 as new mine production comes on line,” they predicted. “However, we continue to believe future mine production will depend largely on lower grade mines, which will redefine the industry’s coal regime.”

In their analysis, Haywood noted the zinc price increased 114% last year, ending the year at US$1.15/lb, “a price at which many marginal Chinese producers are profitable.”

“In the short term, we expect zinc prices to remain near current levels, and have forecast a 2010E zinc price of US$0.95 per pound, followed by uS$1.05 per pound zinc price in 2011, and US$1.10 per pound zinc price in 2012,” the analysts predicted. “We are forecasting that zinc prices will decline after 2012, reaching our long-term forecast of US$0.95 per pound in +2014.”

Meanwhile, Haywood noted the lead market should be roughly balanced this year, with a deficit in 2011 as lead demand continues to grow in China. “We are forecasting a 2010E lead price of US$0.95 per pound. We also expect the lead price to increase to US$1.10 per pound by 2012, then decline to our long-term forecast of US$0.95 per pound in +2014.”

The analysts also forecast that nickel prices will decline to US$7.75/lb in 2011, and reach Haywood’s long-term forecast of US$7.50/lb in +2012. “Our biggest concern with the nickel market is the number of new mines under construction…that will collectively add another +250,000 tonnes of nickel in a 1.3 million-tonne-per-year market, which has historically has grown 5% to 7% annually.”

Haywood suggests Chinese pig iron will continued to keep the market saturated. Meanwhile technology continues to lower the amount of nickel used in stainless steel. The analysts also note the Vale strike in Sudbury and Voisey’s Bay will also get settled, “which will further exacerbate current inventory levels globally.”

The analysts anticipate growing demand fundamentals will dominate the molybdenum market, “noting that the current list of greenfields projects lacks a significant number of large-scale ventures to potentially fill the expected supply deficit.”

“Year to date, molybdenum has averaged US$14.25 per pound, in line with our 2010E forecast price of US$15.00 per pound,” they added. “We expect that molybdenum prices will increase to US$20.00 per pound in 2011, declining to a long-term estimate of US$15.00 per pound in +2013.”

In the meantime, Haywood remains positive on its outlook for the uranium sector, “Particularly given the mid- to long-term supply/demand fundamentals driven by diversity in demand growth, but only stilted primary supply addition.”

The analysts expect a number of near-term catalysts “that will provide greater stimulus on the spot price through changes in government policy, renewed investment appetite, lower production at large mines, as well as tangible delays in commercial production from new projects.”

The cost of base metals such as copper and aluminium have traditionally been completely overshadowed by the price of crude oil.

It was oil that got the headlines, while copper and the other main metal commodities stayed very much in the background.

All this changed in the year or two before the global economic bubble burst in the summer of 2008.

Yes, the rapidly increasing price of oil still dominated the financial headlines, but suddenly there was also a lot of reporting on the fact copper and other metal prices were also hitting all-time highs.

Figures from the London Metal Exchange tell the story – in April 2000 the price of “bell weather” metal copper was $1,679 per metric tonne, by April 2008 this had risen to $8,685.

Little wonder local newspapers across the UK had started to write stories about big increases in cases of thieves stealing copper pipes and wires to sell on the black market.
For a moment you would have thought copper was the new gold.

At the same time, a growing number of metal mining companies had quietly made it onto the FTSE 100 index of leading UK shares, many with rather un-English sounding names.

There was Antofagasta from Chile, Mexican business Fresnillo, India’s Vedanta, and Kazakhmys from Kazakhstan, out of a total 11 mining firms that still remain on the FTSE.

And instead of being unassuming members of the index, the mining stocks have very often been the FTSE’s biggest daily risers or fallers, such has been the volatility of global metal prices in recent years.
China’s metal appetite

The big growth in the price of base metals up to mid-2008 was led by China’s arrival as a new economic powerhouse with an insatiable appetite for raw materials.

Analysts say global copper supplies remain tight

Such was China’s need for copper in particular, that global demand started to outpace available supplies, and the price shot up accordingly.

While China’s imports of copper and other metals has remained high post summer 2008, demand in the West tailed off as the recession hit North America and Europe, and prices fell back accordingly.

By December 2008 copper prices had slumped to $3,072.

But with the global economy slowly recovering last year as the US, Japan and leading European economies Germany, France and the UK all exited recession – albeit hesitantly in some cases – metal prices recovered in 2009.

The price of copper rose to an average of $6,590 last year.

Tight supplies

For most metal analysts prices are set to rise further in 2010, but it could be a bumpy ride along the way.
“We see metal prices being strongly up on last year, but still with a lot of volatility,” says David Wilson, London-based director of metals research at Societe Generale.

“If you look at copper in particular, the price at the moment is around $6,567 a tonne. We forecast this to rise to an average of $7,435 for the year as a whole.

“We predict the rise because global demand is rising strongly again, while copper supplies remain tight.”

Mr Wilson says the likely volatility comes because of concerns about macro issues, such as whether the debt problems in Greece, Portugal and other European countries could hit the global economy.

“There have also been concerns that demand for metals could fall in China because of the country’s fiscal tightening,” he adds.

“But I think that is a little misplaced – the Chinese economy is still on target to grow 8% this year, the government just doesn’t want it to grow any faster than that.”

Greece fears

Fairfax economist Dmitry Kalachev agrees, predicting that China’s vast imports of base metals will continue to rise strongly, despite the country’s monetary tightening measures.

“We see copper rising to an average of $8,200 this year,” he says.

“All the major infrastructure projects in China this year are still in place.

“The debt situation in Greece and Portugal could have some [negative] implication on commodity prices if it causes the euro to fall in value.”

This is because commodities are priced in the US dollar, and a weaker euro would make them more expensive to buy for country’s in the eurozone.

Yet Mr Kalachev says an impact on the price of commodities from Greece and Portugal will likely be limited.

“China is the main driving factor, and other developing countries such as India and Brazil, whose economies are also continuing to grow strongly.”

Charles Kernot, director of metals and mining at Evolution Securities, is far more cautious, but still sees metal prices going up.

“We see the price of copper rising from an average of $6,590 last year to $7,660 this year,” he says.

“But it is going to be pretty volatile.

“All the uncertainly in Europe surrounding Greece, Spain and Portugal is creating a lot of uncertainly, and there is concern about the impact of the ongoing tightening in China.”

FTSE boost

Mr Wilson adds that the expected further increase in metal prices will also likely lift the share prices of the 11 mining stocks on the FTSE, helping to raise the index in the process.
ut why is the London Stock Exchange proving such a popular place for foreign mining firms to list their shares? Mr Wilson says there are a number of factors.

“London remains the leading centre of expertise for investing in the global mining sector, so firms know they can best attract investment here,” he says.

“The London Stock Exchange is also well regulated and transparent, and has a history of companies successfully listing.

“So you can see why it is proving so popular for foreign mining firms.”

Whatever happens to metal prices this year, they are likely to remain in the news.

Marius Kloppers , chief executive, said many economies, notably the US, were still dependent on government stimulus.

He said such measures had helped drive recovery but had not addressed structural issues such as weak labour markets and excess production capacity in developed economies.

“A further variable will be the impact of any measures to control loan growth in China ,” he said.

He added that in the short term Beijing was focused on containment of asset inflation.

“We remain cautious about the speed and strength of the global economic recovery across the developed world.”

But longer-term prospects were “robust” on the back of growth in China and India, Mr Kloppers said.

BHP yesterday reported a rise in net profits from $2.62bn to $6.14bn in the six months to December 31, with profits excluding exceptional items down 7 per cent to $5.7bn, better than analysts’ forecasts.

BHP’s base metals, iron ore and metallurgical coal businesses performed better than expected, while the petroleum division disappointed because of lower oil and gas prices.

Excluding some items, adjusted net earnings were C$312-million in the quarter compared with C$130-million in 2008.

“With the improvement in the global economy in 2009, commodity prices improved significantly and this resulted in substantial positive pricing adjustments on our base metal revenues in 2009,” the company said.

For the full year, Teck reported net income of C$1,8-billion, compared with C$659-million in 2008.

Fourth-quarter revenue rose to C$2,2-billion, while yearly revenue rose to C$7,7-billion. Both were records for the Canadian firm.

“Our record revenues this year reflected strong performance across the company, including record production of copper at Quebrada Blanca and zinc at both Red Dog and Antamina,” said CEO Don Lindsay.

The company’s cash balance is $1,3-billion, which means its net-debt to net-debt-plus-equity ratio should be around 26% compared with 52% after acquiring Fording Canadian Coal in 2008, Lindsay said.

He has been working to improve the ratio in the hopes that credit agencies will allocate the company an investment-grade rating.

Teck was downgraded after it borrowed $9,8-billion to buy Fording, just before debt markets froze up late in 2008.

Over the last year, the group has sold a number of noncore assets, completed a successful bond issue and sold a 17% stake in itself to the government-owned China Investment Corp to raise funds for debt repayment.

After the company closes its latest asset sale, the disposal of one-third of its interest in the Waneta dam, it will have reduced total debt to just C$6,7-billion, from C$13,4-billion after the Fording acquisition.

The Fording term loan will be just $1,14-billion, with payments of $440-million due this year, about $420-million in 2011 and $280-million in 2012, Teck said.

Net earnings in the fourth quarter included positive after-tax pricing adjustments of C$58-million and an after-tax gain of C$134-million from the sale of the company’s interest in the Morelos gold project in Mexico, partly offset by asset impairment charges of C$68-million on an after-tax basis related to its oil sands projects.

The loss in 2008 included asset impairment charges of C$844 million and negative pricing adjustments of C$270-million on an after-tax basis.

* Eyes on Greece, sovereign debt markets.

(Adds closing prices)

By Michael Taylor and Pratima Desai

LONDON, Feb 8  - Copper rallied on Monday as investors and consumers, seeing bargain prices and believing in the stronger China demand story, piled in.

Benchmark copper MCU3 on the London Metal Exchange ended at $6,450 a tonne from $6,265 at the close on Friday. Earlier on Monday the metal used in power and construction touched $6,475.

A frenzied sell-off across equities and commodities because of sovereign default fears and a stronger dollar last week pushed copper to $6,225, the lowest since Oct. 19, and 20 percent below this year’s high of $7,796 on Jan. 7.

“The correction was a buying opportunity, the impact of tightening in China is completely irrelevant … Bank lending in China has actually been going into deposits, not into spending,” said David Wilson, analyst at Societe Generale.

China is the world’s largest consumer of base metals.

“Wider concerns — the situation in some European countries and their sovereign risk had some kind of impact in terms of driving investors away from riskier assets,” Wilson said.

Worries about Greece’s sovereign debt and a potential spillover have rattled markets and boosted the dollar, which is near 8-1/2 month highs against the euro. [MKTS/GLOB]

A stronger U.S. currency makes dollar-denominated metals cheaper for holders of other currencies.

However, Germany’s Finance Minister Wolfgang Schaeuble said on Monday that the Group of Seven industrialised nations is confident the European Union will sort out Greece’s debt problems. [ID:nLDE6170PC]

“There was a big sell-off on everything last week and it was probably overdone,” said Herwig Schmidt, head of sales at Triland Metals. “Maybe this is a good buying opportunity.”

STOCKS EASE

Aluminium MAL3 closed at $2,012 from versus $1,980 on Friday. LME stocks of the metal, used in transport and packaging, fell 7,450 tonnes to 4.58 million tonnes.

A large portion of those stocks are tied up in finance deals, to release cash for producers and to earn banks higher returns than they would get in money markets.
But while stocks have fallen, investors remain concerned about the pace of the global economic recovery, and further tightening in China.

“Mixed economic data has cast doubt on the speed of the economic recovery,” Standard Bank said in a note.

“The past couple of weeks have seen commodities come under pressure as concerns over Greece and the other Southern European nations have seen the dollar strengthen.”

Traders expect trading to remain subdued until Feb. 22, after the Chinese New Year holiday.

Zinc MZN3 touched a high of $2,053 a tonne and ended at $2,022.5 from $1,940 on Friday and battery material lead MPB3 at $1,965 a tonne compared with $1,940.

Steel-making ingredient nickel MNI3 closed at $17,200 from $17,005, and tin MSN3 at $15,200 from $15,350.

Analysts say nickel may come under pressure after Brazil’s Vale (VALE5.SA: Quote) said it will push its Sudbury, Ontario operations towards full production, regardless of whether it is able to settle a strike at the complex.

Talks between the company and workers — represented by the Canadian Auto Workers — extended several hours past a Sunday strike deadline, before an agreement was reached.

“We are very pleased to have reached this tentative agreement. We believe the new offer is fair and equitable, addressing the needs of both the company and employees,” Xstrata said in a statement.

Xstrata’s Sudbury operations consist of its Nickel Rim South project as well as a mill and a smelter. The smelter processes nickel and copper concentrate from Xstrata operations in Canada and Australia.

Earlier on Monday, Xstrata released 2009 production data showing the company’s total mined nickel output rose 4.6 percent to 57,052 tonnes.

This represents about 5 percent of global output.

In a statement on its website, the Canadian Auto Workers union also called the tentative deal fair and equitable.

A ratification vote is expected to be held early this week.

About 570 workers had been set to walk off the job if a deal had not been reached.

Jerry Dias, assistant to the union’s president, told Reuters on Sunday that key issues in the last-minute negotiations were pension plans, an employee “nickel bonus” tied to the price of the metal, as well as recall rights for hundreds of workers laid off early last year.

Those layoffs followed a sharp drop in nickel prices from a 2007 high of nearly $25 a pound to a low of around $4 a pound in December 2008. The price has rebounded slowly, and was around $8.20 on Monday.

That represented a drop of about 3 percent from Friday, but it was unclear how much of that was due to the Xstrata labor deal, as base metals prices in general were lower.

VALE STRIKE

The labor talks have taken place in the shadow of a strike of more than 3,000 workers at Brazilian miner Vale’s (VALE5.SA: Quote) Sudbury nickel and copper operations, and smaller strikes at Vale’s Voisey’s Bay mine in Eastern Canada and at its Port Colborne, Ontario, processing operations.

The Vale Sudbury strike is now in its seventh month, with no signs that bargaining will restart any time soon.

Some analysts have speculated a deal at Xstrata could spur Vale and the United Steelworkers union to restart talks.

* Many metal stocks rising, locked into finance deals * Sudbury nickel mine talks watched

(Recasts, adds comments/details, changes dateline pvs SINGAPORE) By Michael Taylor

LONDON, Feb 1 (Reuters) – Copper fell to a two-and-a-half month low on Monday, as strong economic data heightened investor concerns that China, the world’s top metals consumer, may further tighten monetary policy. By 1051 GMT, copper for three month delivery on the London Metal Exchange fell to $6,680 a tonne from $6,745 at the curb on Friday, according to the LME. It earlier touched a session low at $6,600, a level not seen since Nov. 16 and was on track for a fifth day of declines, its longest losing streak since August 2009.

Tin prices fell more than 6 percent to its lowest since Dec 24 2009, chasing a broad sell-off in metals last week, and was set for its biggest one-day fall since early July 2009. “It’s just a change in sentiment really,” said Alex Heath, head of base metals and RBC Capital Markets. “I don’t think anybody was under any misapprehension that metals had got ahead of themselves in terms of actual demand and growth … Trees do not grow to heaven.

“You can’t have this amount of money flooding around the system without (China) having some kind of tweaking processes going on,” he added. “You are still going to have huge growth this year … it’s healthy.” China’s economy made a strong start to the year, according to a pair of business surveys released on Monday that also underlined the mounting challenge policymakers face to curb inflation.

An index based on an official survey of purchasing managers last month eased from a 20-month high in December but remained firmly in expansionary territory, while an index derived from a companion poll by HSBC scaled an all-time high. That comes on the heels of 5.7 percent expansion in the U.S. economy in the fourth quarter, the quickest pace in more than six years, the Commerce Department said.

But some analysts say Chinese concerns are overblown. “With the risks in China still tilted towards inflation and stronger-than-expected growth, despite the shift towards less accommodative policy, the problem in China remains too much demand not too little,” Goldman Sachs said in a note.

“Given that we have already assumed slowing metals demand growth for China in 2010, this suggests that the risks to Chinese metals demand and our forecasts are likely skewed to the upside rather than to the downside in coming months.” Copper fell 8.5 percent last month, in part due to rises in LME inventories, which indicate that demand outside China remains weak. Copper prices rose 140 percent last year.

The latest data showed stocks rose 2,475 tonnes to total 543,525 — their highest since late February 2009. Among other base metals, aluminium traded at two-month lows at $2,068 versus $2,080 at the curb on Friday. LME stocks in the metal, used in transport and packaging, fell 625 tonnes but remained near record levels above 4.6 million tonnes.

Steel making ingredient nickel traded at $18,375 from $18,500 at the curb on Friday, while battery material lead was at $2,004.50 from $2,020. Lead earlier touched a low of $1,960, a level not seen since August. Recent rises in cancelled warrants — material earmarked for delivery — are under close scrutiny from metals investors for signs of improving demand.

On Friday, cancelled warrants for lead were 15,850 tonnes, compared with 11,700 on Jan. 28 and 75 tonnes on Dec 17. LME lead stocks rose 200 tonnes to hit 157,500 tonnes, a level not seen since September 2003. Contract talks between Xstrata and workers at its main nickel operations in Sudbury, Ontario were also being watched by many traders.

Zinc traded at $2,090.25 a tonne from $2,110 at the curb on Friday, and tin was at $16,300 from $17,200. Zinc earlier hit a three and a half month low at $2,074. RBC’s Heath said because tin is not traded as much by funds compared to other LME metals, it tends to be more volatile.

“It doesn’t take too much to do that in tin,” he added.

Metal Prices at 1059 GMT Metal Last Change Percent Move End 2009 Ytd Percent move COMEX Cu 303.05 -1.55 -0.51 332.75 -8.93 LME Alum 2062.00 -18.00 -0.87 2230.00 -7.53 LME Cu 6668.00 -77.50 -1.15 7375.00 -9.59 LME Lead 1995.00 -25.00 -1.24 2432.00 -17.97 LME Nickel 18200.00 -300.00 -1.62 18525.00 -1.75 LME Tin 16250.00 -950.00 -5.52 16950.00 -4.13 LME Zinc 2083.00 -27.00 -1.28 2560.00 -18.63 SHFE Alu 16190.00 150.00 +0.94 17160.00 -5.65 SHFE Cu* 54380.00 -1050.00 -1.89 59900.00 -9.22 SHFE Zin 17240.00 -155.00 -0.89 21195.00 -18.66 ** 1st contract month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07.

The Euro has major support around 1.4000 levels because any sustained break below this level would likely lead to sharp rally in the US Dollar, and an imminent fall in major asset classes.

The base metals complex will continue to take cues from the movement in the dollar, economic data and risk sentiment in the financial markets. Though Chinese data has come on the positive side concerns over lower lending in the world’s biggest base metal consumer may lead to downside pressure. If the dollar continues to retain strength on the back of risk aversion then base metal prices could witness downside pressure.

The major highlight of this week is the two-day FOMC meeting and the statement will be announced on 27th January. We do not expect a change in the monetary or credit policy in this meeting but the focus of the meeting will revolve around the exit strategy and whether policymakers will discuss further asset purchases to support the mortgage beyond the end of March decline.

Other important data releases from the US in the week include new home sales, durable goods orders, unemployment claims, Chicago PMI. But by the end of the week markets could get choppy ahead of the release of the advance report on fourth-quarter GDP on Friday. The GDP is expected to advance 4.5% in the fourth-quarter against 2.2% in the last quarter. If the data comes in as per expectations then risk appetite in the financial markets could rise and prices of base metals could rise on expectations of a rise in demand from the world’s largest economy.

Copper
Copper prices are trading sideways with immediate support for MCX February contract seen at Rs.335.45. Further below, crucial support is seen at 330 levels. Whereas resistance is seen at Rs.346.50 levels & further upwards at Rs. 351.00 levels.

Zinc
Zinc prices are trading down with immediate support seen at Rs.104.80 levels for MCX January contract whereas crucial support is seen at Rs.102.35 level. Short-term resistance is seen at Rs.107.90 whereas major resistance is seen at Rs 109.20 levels.

Overall, market sentiment has become unsettled over Chinese lending curbs and the pace of the economic recovery. Chinese banks have implemented the 0.5-percent increase in their reserve ratio that was ordered last week by the country’s central bank to curb excessive lending.

But there were improved growth forecasts from the International Monetary Fund. The IMF upgraded its 2010 forecast for global growth to 3.9 percent from an October estimate of 3.1 percent and said it expects the world economy to grow by 4.3 percent in 2011. It revised Chinese growth up to 10 percent this year and 9.7 percent next year.

The IMF expects prices for commodities to continue to rise as global economies recover. On the data side, the US central board confidence index came in at 55.9, better than the expected 53.6 and the highest since September 2008.

The last day to trade in Kiwara Shares on the JSE will be the scheme effective date and the JSE has agreed to terminate the listing of Kiwara Shares on the JSE with effect from the commencement of business on February 9 or a later date requested by Kiwara and approved by the JSE. – I-Net Bridge

“Kiwara shareholders are advised that at the meeting convened by the High Court of Justice in England and Wales (the “Court”) held earlier today, 11 January 2010 (the “Court Meeting”), and at the subsequent General Meeting (the “General Meeting”) to approve the Scheme required to implement the acquisition by First Quantum of the entire issued and to be issued share capital of Kiwara, all of the resolutions received the necessary majority votes and were accordingly approved,” the company said in a statement to the JSE.

The terms of the scheme will see Kiwara shareholders to receive 0.0085 new First Quantum shares and £0.375 for every Kiwara share held.

As we have noted before, timing is everything in investment, and thus leads to arguments over which commodity has been the better performer out of copper and gold – and the other metals commodities too. On performance in 2009 there would seem to be no argument – copper rose some 140% and gold around 25% – but it was quickly forgotten how far copper and the other base metals plunged in 2008 before recovering. True gold fell too, but only by a fraction of the fall in other metals prices.

So, if one had bought copper at the end of June 2008 it would have cost just under $4.00 a pound – and the copper price now, after a 140% rise this year, would fetch a fraction over $3.30 – a fall of around 17.5% over the 18 months. Gold on the other hand was at around $930 an ounce at the end of June 2008 and is now at $1100 plus – a rise of over 18%. Thus which has been the better performer overall?

Over 2 years we see similar patterns. Gold is up 30% while copper is at almost exactly the same price it was at the beginning of 2008.

Thus arguably gold has proved to be a far better protector of wealth over a period of time than copper, and that is one of its key attributes and why gold investment still remains strong and why the current gold price is not a bubble. Investors continue to buy gold and gold derivatives like gold ETFs as protectors against financial meltdown. If there is a double dip ahead, as some predict, then there has to be the likelihood that base metals prices will plunge along with those of the stock markets in general. As in 2008, gold may also be vulnerable to falls as some metal has to be sold off to meet liquidity problems for major funds and institutions, but as was seen then, the fall is likely to be far less steep, and the recovery much faster, than for base metals, with gold holding its position much better as a wealth preserver than most other forms of investment.

The gold price is often talked of as being volatile, but as we saw last year nothing like as much as the other more industrially-related commodities, so it can smooth out dips in a way other metals, or even oil, generally cannot. What is true though, is that the kind of price crash we saw in October 2008 can create spectacular buying opportunities for those that fall the most as crashes, like steep price rises, are invariably overdone.

Following the closing of the sale of BBAM, CAMI proceeded to distribute the net proceeds of the sale of the BBAM Shares to its preferred shareholders. VVC held 10% of the preferred shares of CAMI and as such has received the sum of $418,600.60 and is expecting an additional $27,100 once all the accounting of the transaction has been completed. Since 2007, when VVC started selling BBAM shares, the Company has received the aggregate amount of over $3.9 million relating to the sale of CAMI and BBAM shares.

As CAMI will in effect become an inactive company, VVC intends to sell all of the shares of the CAMI to a third party for $1.00. VVC will write-down the value of its investment in CAMI record an impairment loss of $1,803,014 for the 9-months period ended October 31, 2009, to reflect the effects of this transaction.

About VVC:

VVC Exploration Corporation is a Canadian exploration company with projects in Mexico and Canada. This includes a silver, lead and zinc prospect in Chihuahua State, Mexico, a gold-silver property in northern Durango State, MX, and a grass-roots gold prospect in the Timmins area of northern Ontario. VVC is also aggressively searching for other projects – mainly precious minerals and base metals at various stages of development in North America, with an emphasis on gold and silver in Mexico.

Subsequent to the Company’s 2008 fiscal year-end, worsening economic and market conditions caused management to adopt a conservative approach to exploration activity. During this period, the overriding strategy has been to preserve cash resources, and maintain the Company’s capital structure by avoiding highly dilutive financings. As a consequence, the level of expenditures during the fiscal year was limited, with primary focus on developing new concepts and exploration targets.

Management has conducted the initial stages of new grass-roots exploration programs for precious, and to lesser extent, base metals, comprising in-house research, data analysis, and prospecting. New targets have also come to light as a consequence of detailed analysis of previous drilling on the Cadillac Break project in western Quebec where the Company maintains a claim position of approximately 8800 hectares. Management has reviewed a number of acquisition opportunities during the year, and continues to seek new opportunities via this route as well.

Agreement was reached recently to revise the terms of the Silver Streak property option, which has been extended. On the other hand, the Company was not able to obtain satisfactory revisions to the terms of the Osilinka-Cat Mountain option, which has now been relinquished. Finally, management has determined that under current market conditions, the apparent potential of the Herd Dome property does not warrant the high initial expenses related to access and permitting required of the next stage of exploration. Consequently, that option has been dropped as well.

Having conserved its funds during the recent period of uncertainty, and received substantial refundable tax credits from earlier exploration expenditures, Cadillac Mining’s cash balances are currently in excess of $600,000. Consequently, the Company is now in a position to resume a policy of more aggressive acquisition and exploration.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this news release, which has been prepared by Management.

Hochschild has advised the Company that it has incurred to date approximately US$1.5 million on exploration of the precious metals area of the Vaquillas Project, and under the terms of the amending agreement, Hochschild has committed to expend a further US$500,000 on exploration of the entire Vaquillas Project by December 31, 2010.

In order to exercise its option to acquire a 60% interest in Vaquillas, Hochschild must incur a total of US$6.0 million in exploration expenditures by December 31, 2013. Hochschild will be making the US$100,000 option payment to the owner of certain of the Vaquillas concessions which is due by the end of this year.

About Iron Creek

Iron Creek Capital Corp. is a Vancouver-based mineral exploration company engaged in the acquisition and exploration of precious and base metals projects in Chile.

    ON BEHALF OF THE BOARD

    "Michael Winn"
    Michael Winn, President

Neither the TSX Venture Exchange nor the Investment Industry Regulatory Organization of Canada accepts responsibility for the adequacy or accuracy of this release

— Copper prices closed down on Tuesday, as concerns about swollen inventory levels weighed on sentiment and investor position-squaring picked up pace as the dollar extended its late-year rally.

“The fundamentals of copper aren’t that fantastic at the moment and I think we are seeing some recognition of that. LME stocks continue to move higher,” said Dan Smith, a metals analyst at Standard Chartered.

Benchmark copper for March delivery on the New York Mercantile Exchange’s COMEX division shed 2.05 cents to end at $3.1380 a lb.

On the London Metal Exchange (LME), copper for three-months delivery ended at $6,881 (U.S.) a tonne, down from a close of $6,940 on Monday.

Highlighting still weak physical demand, copper stocks in LME warehouses rose 1,450 tonnes to total 480,900 tonnes, the highest since mid-April.

Additional pressure stemmed from the U.S. dollar, which rose to its highest level in nearly two months against the yen on Tuesday as U.S. bond yields rose after strong housing data underpinned expectations for a U.S. economic recovery.

Against the euro, the American currency hit a 3-1/2 month peak amid ongoing worries about Greece’s fiscal health.

“The dollar is up a little bit today, and that is causing some folks to lighten up ahead of the holidays,” said Sterling Smith, an analyst for Country Hedging Inc in St. Paul, Minnesota.

Some New York energy and commodity markets will close early on Thursday, Dec. 24, and all will be closed on Friday for Christmas Day.

Copper’s losses were limited however, as arbitrage opportunities between the Shanghai Futures Exchange and the LME suggested increased future shipments of the metal into China, the world’s top metals consumer.

“The one thing I am paying most attention to is the China price holding up against the LME,” said Catherine Virga, senior base metals analyst with CPM Group in New York.

“With arbitrage opportunities reappearing, I am expecting stronger imports early next year,” she said.

Data on Tuesday showed the metal giant’s refined copper imports climb 14.8 per cent in November, rebounding from a 40 per cent fall in October.

“There are Chinese manufacturers claiming they can’t meet demand for autos and appliances. It highlights the strength of Chinese consumer demand,” noted John Meyer, analyst at Fairfax.

In other metals traded, nickel ended at $17,750 from $17,900, with LME stocks rising 114 tonnes to 150,612, a whisker away from all-time record levels of 151,254 tonnes seen in 1994.

The stainless steel making ingredient hit six-week highs on Monday despite record stocks, following an announcement that Russia will reinstate a 5-per cent export tariff on the metal.

Elsewhere, aluminum ended at $2,242 from $2,268. Stocks of the metal in LME warehouses fell 3,525 tonnes but remained near record levels of around 4.6 million tonnes.

Much of the stock of the metal used in transport and packaging is tied up in financing deals however, so it is not available and its impact on prices is limited.

Zinc , used to galvanize steel, ended at $2,434 from $2,438, having hit its best level since March last year on Tuesday, while battery material lead was at $2,306 from $2,310. Tin traded at $15,825 from $15,900.

Copper prices slipped below the $7000 mark on Tuesday, taking cues from the stronger dollar and a rise in inventories. Yesterday, copper inventories rose 750 tonnes and may continue to rise as fresh inflows in Korea are rising. China is re-exporting its ample oversupply of the metal in to LME listed Asian warehouses.

On the macroeconomic front, the Dollar Index strengthened on Tuesday as risk aversion in the financial markets led to demand for low-yielding currencies. The currency closed above the 76 mark as investors opted for safer investments. The Dow Jones closed lower by 107 points yesterday and this showed that investors remained wary about the economic recovery. Renewed fears over deteriorating credit ratings in US and UK benefited the Dollar Index as risk aversion loomed in.

Aluminum prices could trade with a positive bias on news that that the global aluminum surplus will narrow by 54% in 2010 from this year in China. The surplus of primary aluminum will narrow to 1.19 million tons from 2.57 million tons. Aluminum prices could trade with a positive bias today.

On the macroeconomic front, the Dollar Index could strengthen and trade with a positive bias as risk aversion could continue to raise demand for the low-yielding dollar. This could put base metal prices under pressure.

Copper
Copper prices are sideways with immediate support for MCX February contract seen at Rs.324.60. Further below, crucial support is seen at 322 levels.

Whereas resistance is seen at Rs.331.40 levels & further upwards at Rs. 335 levels.

Zinc
Zinc prices are sideways with immediate support seen at Rs.106.05 levels for MCX December contract whereas crucial support is seen at Rs.104.65 level. Short-term resistance is seen at Rs.108.90 whereas major resistance is seen at Rs 110.05 levels

 * Euro recovers from 1-month low vs dollar

 * Japan Q3 GDP growth revised down sharply
 (Recasts lead, updates prices to Shanghai close)

 By Manolo Serapio Jr.

 MANILA, Dec 9 (Reuters) - Copper fell to its lowest in more
than a week on Wednesday as investors trimmed positions in
riskier assets following weak data and growing sovereign debt
troubles.

 Fitch Ratings cut Greece's debt to BBB+ with a negative
outlook while Moody's downgraded six Dubai-linked issuers on
Tuesday after concluding that no "meaningful" government
support would be provided to top firms such as DP World
(DPW.DI: Quote). [ID:nGEE5B70TN] [ID:nGEE5B70V3]

 The Greece news sent the euro skidding to a one-month low
against the dollar, before it regained some ground in Asian
trading, while sterling extended losses ahead of Britain's
pre-budget report. [USD/]

 Adding to the gloom, revised data showed Japan's economy
grew just 0.3 percent in the third quarter versus an initial
growth estimate of 1.2 percent on slow capital spending.
[ID:nTOE5B800U]

 "The base metals complex is lacking direction for the next
convincing break, and in the absence of any significant changes
to the fundamentals, the markets are drifting on the back of
macro news, concerns about certain sovereign debt position and
the dollar as well," said Yingxi Yu, analyst at Barclays
Capital in Singapore.

 Copper touched over 14-month highs last week and market
players are eyeing a slew of data, including industrial output,
consumer prices and urban investment, from top metals consumer
China due on Friday, for cues on whether a further pullback is
warranted.

 Three-month copper on the London Metal Exchange MCU3
dropped $80 to $6,900 a tonne by 0703 GMT, stretching losses
for a fifth day running.

 Shanghai's benchmark third month copper SCFc3 fell 1,100
yuan to close at 54,500 yuan ($7,981) a tonne. The most active
fourth month contract SCFH0 slipped 1,220 yuan to 54,620
yuan.

 Despite Wednesday's decline, copper prices are still up
more than 125 percent this year, driven by Chinese buying, a
struggling dollar and investment money betting on a pickup in
demand next year.

 "I think the market needs a significant correction towards
the end of the year. Most investors in China also need to cut
long positions," said a Shanghai-based trader, adding LME
copper will find strong buying interest when it drops to around
$6,500.

 "Most investors are still quite positive on the prospects
for next year so the selling pressure into the year-end would
be quite limited," said Barclays' Yu.

 Other base metals also edged lower with three-month LME
aluminium MAL3 down $53 to $2,110 a tonne.

 The metal touched a 13-month peak of $2,190 a tonne on
Tuesday, buoyed by rising physical premiums in parts of Europe,
even as LME inventories stand near record levels at 4.59
million tonnes.

 "We believe the global aluminium market is not in a
deficit, but the current physical market is tight in some
regions because the bulk of LME warehouse inventories are tied
up in financing deals and therefore are not readily available,"
Barclays' Yu said.

 Another metal bound to see increased availability is nickel
after Canada's First Quantum Minerals (FM.TO: Quote) said it will buy
BHP Billiton's (BHP.AX: Quote) closed Ravensthorpe nickel mine for
$340 million, paving the way to revive production that could
add nearly 3 percent to world supply. [ID:nSYD519009]
 Base metals prices at 0703 GMT
 Metal         Last       Change   Pct Move  End 2008  Pct chg
09
 LME Cu        6900.00    -80.00     -1.15    3060.00
125.49
 SHFE Cu*     54500.00  -1100.00     -1.98   23840.00
128.61
 LME Alum      2110.00    -53.00     -2.45    1535.00
37.46
 SHFE Alum*   15865.00   -170.00     -1.06   11540.00
37.48
 COMEX Cu**     312.05     -1.90     -0.61     139.50
123.69
 LME Zinc      2290.00    -37.00     -1.59    1208.00
89.57
 SHFE Zinc    18000.00   -445.00     -2.41   10120.00
77.87
 LME Nickel   15990.00   -160.00     -0.99   11700.00
36.67
 LME Lead      2295.00      6.00     +0.26     999.00
129.73
 LME Tin      15020.00   -130.00     -0.86   10700.00
40.37
 LME/Shanghai arb^           626
 Dollar/yuan          6.8284 \ 6.8294
 ** 1st contract month for COMEX copper
  * 3rd contact month for SHFE aluminium, copper and zinc
  ^ LME 3-m copper in yuan, including 17 pct VAT, minus SHFE
third month

U.S. employers cut far fewer jobs than expected last month, and the umemployment rate dropped to 10 percent from 10.2 percent in October, bolstering hopes that a sustainable recovery was building.

The dollar edged lower against a basket of major currencies, after jumping 1.7 percent on Friday, its biggest one-day performance since mid-December last year.

“There had been expectations on a rebound in the dollar. Now the time bomb has exploded, but prices haven’t retreated,” said Zhu Yanzhong, an analyst at Jinrui Futures.

“Prices of metals, with the exception of gold, have been pretty much unscathed. It means that speculators still want to push prices higher.”

But Zhu warned the dollar rebound might not be a one-day show.

“Base metals prices will be under pressure to retreat once investors see the rebound continue,” he said.

Shanghai’s benchmark third-month copper futures contract edged down 0.3 percent to 55,550 yuan a tonne by 0226 GMT. It hit 55,850 yuan last week, its highest since Sept 12, 2008.

The most-active contract for March delivery fell 0.3 percent to 55,780 yuan a tonne.

Three-month copper on the London Metal Exchange was flat at $7,040 a tonne, after hitting its highest level since late September last year.

“The general trend is still pointing upward, even though December is traditionally a month with lower buying interest and price consolidation,” said Li Rong, an analyst at Great Wall Futures.

Chinese leaders began a key annual conference on Saturday to map out economic policies for next year, and are expected to stick to a loose monetary stance and active fiscal policy.

“Worries that the Chinese government would tighten up monetary policy in the short term have been eliminated. Everyone, from government or private sector, is bullish on next year,” said a Shanghai-based trader.

“Once prices edge lower, buying interest grows. In general, the market is optimistic, although we will see technical corrections.”

Among other metals, LME aluminium fell $11 to $2,135 a tonne, after posting a 6.5 percent gain last week. Shanghai aluminium was flat at 15,750 yuan.

Premiums for physical aluminium are rising in Europe on tightened supply, as much of the record high inventory in LME is tied up in financing deals that are not likely to suddenly be unwound

U.S. employers cut far fewer jobs than expected last month, and the umemployment rate dropped to 10 percent from 10.2 percent in October, bolstering hopes that a sustainable recovery was building.

The dollar edged lower against a basket of major currencies, after jumping 1.7 percent on Friday, its biggest one-day performance since mid-December last year.

“There had been expectations on a rebound in the dollar. Now the time bomb has exploded, but prices haven’t retreated,” said Zhu Yanzhong, an analyst at Jinrui Futures.

“Prices of metals, with the exception of gold, have been pretty much unscathed. It means that speculators still want to push prices higher.”

But Zhu warned the dollar rebound might not be a one-day show.

“Base metals prices will be under pressure to retreat once investors see the rebound continue,” he said.

Shanghai’s benchmark third-month copper futures contract edged down 0.3 percent to 55,550 yuan a tonne by 0226 GMT. It hit 55,850 yuan last week, its highest since Sept 12, 2008.

The most-active contract for March delivery fell 0.3 percent to 55,780 yuan a tonne.

Three-month copper on the London Metal Exchange was flat at $7,040 a tonne, after hitting its highest level since late September last year.

“The general trend is still pointing upward, even though December is traditionally a month with lower buying interest and price consolidation,” said Li Rong, an analyst at Great Wall Futures.

Chinese leaders began a key annual conference on Saturday to map out economic policies for next year, and are expected to stick to a loose monetary stance and active fiscal policy.

“Worries that the Chinese government would tighten up monetary policy in the short term have been eliminated. Everyone, from government or private sector, is bullish on next year,” said a Shanghai-based trader.

“Once prices edge lower, buying interest grows. In general, the market is optimistic, although we will see technical corrections.”

Among other metals, LME aluminium fell $11 to $2,135 a tonne, after posting a 6.5 percent gain last week. Shanghai aluminium was flat at 15,750 yuan.

Premiums for physical aluminium are rising in Europe on tightened supply, as much of the record high inventory in LME is tied up in financing deals that are not likely to suddenly be unwound.

The Indian rupee rose its highest close in more than two weeks on Thursday as the dollar’s weakness ahead of the European Central Bank’s (ECB) policy meeting triggered buying by exporters. [INR/]

China’s economy is expected to grow about 8.5 percent this year and the U.S. labour market improved in November, with private sector job losses declining for the eighth straight month and employers planning fewer layoffs. [ID:nSHA177594] [ID:nN02324306]

The outlook is still positive for the red metal on rising equities and hopes of an early economic recovery.

“Sentiment still remains positive for the entire base metals complex and there is no sign of correction, further moves would be data-dependent,” said Pranav Mer, an analyst with India Infoline in Mumbai.

Analysts said traders would closely watch the U.S. non farm payrolls data for further cues. See [ID:nN02324306]

“Buying could be initiated at 330 rupees, for a target of 337 and with a stop loss of 326 rupees,” said Priyank Upadhyay, head of research with Commtrendz Research.

In other base metals, zinc December MZIZ9 was 1.03 percent lower at 110.35 rupees per kg, while lead for December delivery MLDZ9 was 1.71 percent lower at 111.95 rupees.

December copper was up 10 cents to $3.03 per pound in New York trade, while three-month copper added $234.50 to $6,664.50 per tonne on the London Metal Exchange.

Demand hopes were stimulated by the news from the US Commerce Department that the United States gross domestic product was up by 3.5 percent in the third quarter, a sign that the US economy has exited the recession.

Other factors helping to push copper higher was a decline of 325 tonnes in LME copper inventories on the session and the likelihood that a strike at a copper mine in Chile, now in its 17th day and with no immediate prospects for an end, has caused the mine to reduce production.

Other base metals prices also saw gains as aluminium added $43 to $1,955 per tonne, zinc was up $75 to $2,265 per tonne, lead was $134 higher to $2,365 per tonne, tin added $350 to $15,000 per tonne, and nickel gained $890 to $18,690 per tonne.

Among precious metals, December gold added $16.60 to $1,047 per troy ounce in New York trade, while December silver was up 42 cents to $16.66 per troy ounce, January platinum was $31.30 higher to $1,338,20 per troy ounce and, in mid-morning trade, December palladium added $7.55 to $324.95 per troy ounce.

The producer noted in a statement on Thursday that the investment would be used to transform the open-pit mining operations into a major underground mine, while it would also construct an associated magnetite extraction plant.

The EHM operation was due to be closed in 2012.

“This is the second of five brownfield projects that Xstrata Copper is planning to move into the construction phase over the next nine months across our global operations, following the approval of the Lomas Bayas extension project in October,” Xstrata Copper CE Charlie Sartain noted.

The project would enable EHM to achieve output levels of about 50 000 t/y of copper and 70 000 oz/y of gold in concentrate from 2012 onwards, when processing from open-pit mining would stop.

Construction of the underground mine would start in the first half of 2010, with first production expected by late 2011. It would reach full output by early 2013.

The construction of the magnetite plant would also start in the first half of 2010 and would be commissioned early in 2011.

The investment decision comes after feasibility studies into the proposed project had resulted in a revised ore reserves estimate of 72-million tons at a grade of 1% copper, 0,5 g/t of gold and 22% magnetite, Xstrata Copper stated.

It added that the total tonnage represented a 600% increase over previously published underground reserves.

Ore would be mined mainly from a major hoisting shaft to be sunk to a depth of 1 000 m, producing six-million tons a year of ore at full capacity.

The existing concentrator at EHM would be reconfigured to align with the underground production rate, while a separate extraction circuit would be installed to produce magnetite concentrates, the copper-miner pointed out.

The magnetite processing operation would produce about 1,2-million tons a year of magnetite, which would be exported to Asia.

The project was seen as an important step in sustaining Xstrata Copper’s north Queensland copper operations, which Sartain noted made a significant contribution to the Queensland economy.

It would continue to sustain the future of EHM, while also continuing to supply copper concentrates to Xstrata Copper’s smelter at Mount Isa, which supported the Townsville refining operations.

It would also create 400 permanent jobs from 2013 onwards.

On October 15, Xstrata announced that it would invest $293-million to extend the life of the Lomas Bayas mine in Chile by eight years to 2020 to sustain production capacity at 75 000 t/y of copper cathode.