The most actively traded contract, for May delivery, settled 0.10 cent higher at $3.6280 a pound on the Comex division of the New York Mercantile Exchange.

Copper prices oscillated around the unchanged level throughout the trading day as traders reacted to different economic data. Copper is widely considered an economic barometer because of its widespread applications in electrical wiring, heat conductivity and water tubing.

Retail and food service sales rose 0.8% from February to a seasonally adjusted $411.07 billion as Americans spent more on home improvement, gasoline, cars and electronics in March.

The National Association of Home Builders said its housing market index was 25 in April, from 28 in March. This was the first decline in seven months and the reading missed expectations of 28. A bearish outlook for the sector is considered a sign of weaker future demand for the industrial metal.

“Although builders in many markets are noting increased interest among potential buyers, consumers are still very hesitant to go forward with a purchase,” said Barry Rutenberg, the trade group’s chairman and a builder from Gainesville, Fla. “Our members are realigning their expectations somewhat until they see more actual signed sales contracts.”

Elsewhere, Citi Investment Research adjusted its copper price outlook for the next three years. The bank raised its average copper price forecast for 2012 to $3.85 a pound, from $3.55 a pound previously. But Citi now expects copper prices to average at $3.80 instead of $3.87 in 2013, and to slide to $3.61 in 2014, versus previous forecasts of $3.72 a pound.

“The prospect of a return to the high levels of Chinese auto production growth seen in 2009 and 2010 looks remote to us,” Citi said. Hopes of a boost in construction activity are overplayed, the bank added, as “it is now reported that new unsold property is being reclassified as economic housing in order to assist in meeting the central government’s volume targets.”

Moreover, “the lack of any rebound in [U.S.] construction activity means copper demand will remain well below precrisis levels,” Citi said.

At the Multi Commodity Exchange, August copper rose by Rs 3.60, or 0.87%, to Rs 418.10 per kg, with a business turnover of 4,953 lots.

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The November contract edged up by Rs 3.10, or 0.74%, to Rs 423 per kg, with an open interest for 2,593 lots.

Market analysts said a firming trend in overseas markets, on optimism that the US economy will recover, influenced metal prices in futures trade here.

In addition, a pick-up in spot market demand also influenced copper futures prices here, they said.

Meanwhile, copper rose by 0.5% to $8,875.50 a tonne on the London Metal Exchange.

Copper fell below $US4 early in the session, as equities and other commodities faced losses following Friday’s after-hours announcement by Standard & Poor’s.

The most actively traded contract, for September delivery, settled down US15.55 cents, or 3.8 per cent, at $US3.9615 a pound on the Comex division of the New York Mercantile Exchange.

S&P’s downgrade of the US’s credit rating to double-A-plus is expected to raise the cost of borrowing for the US Treasury and have wide effects throughout the economy.

As market participants see losses from the downgrade, many investors are dropping risky assets for perceived safe havens, like gold.

The benchmark copper contract hasn’t fallen below $US4 since May 23, when it reached a low of $US3.9535 a pound.

The declines are likely to make copper more attractive to Chinese buyers in the coming months, said Robin Bhar, an analyst with Calyon.

China is the world’s largest consumer of copper, as the country’s booming construction and manufacturing sectors use the raw material for everything from electrical wiring in cell phones to copper plumbing in apartment buildings.

As the price of copper outside of China falls in comparison to domestic prices, the so-called “arbitrage window” has reopened, “and we may see more interest from mainland China,” he said.

Lower prices may not help the bottom lines for copper-mining companies, however. Mr Bhar noted that in second-quarter earnings reports mining companies mentioned higher import costs and inflation.

Still, companies like BHP Billiton, Freeport-McMoRan and Anglo American have assets with fairly low production costs, Mr Bhar said, “so they can still earn pretty good margins.”

Moreover, while copper prices are considered a bellwether of economic growth, the move below $US4 isn’t necessarily a sign that the US economy is heading for a recession.

“I don’t think copper is a leading indicator (of recession),” said Michael Widmer, an analyst with Bank of America Merrill Lynch.

Concerns about the downgrade, along with a lack of fundamental support for copper, have led to lower prices, Mr Widmer said.

Copper is used to make goods from cars to laptops, and demand for those goods tends to decrease as the economy slows.

At MCX Copper August contract is currently trading at Rs.413.50 per Kg, lower by 1.38 against the previous close.

In the earlier session the contract traded at a low of Rs.410.75 per Kg and a high of Rs.418.20 per quintal. Open interest of the contract is 20164 lots and volume traded is 58310 Kg as of now.

Market analysts said weak trend at the London Metal Exchange (LME) as concern that the US economic recovery may be faltering spurred a global sell-off in commodities, led to the fall in Copper futures prices.

Trading sentiment turned better after demand for copper in China, the world’s biggest user, rose by 8% this year, depleting global supplies and boosting prices.

At the Multi Commodity Exchange, copper for delivery in August rose by INR 1.25 or 0.29% to INR 434.25 per kilogram with a business turnover of 11,052 lots. Similarly, the metal for delivery in November edged up INR 1.10 or 0.25% to INR 440.05 per kilogram with an open interest of 937 lots.

Market analysts said that besides a firming trend overseas increased demand in the spot market mainly led to the rise in copper prices at futures trade. Meanwhile, copper for 3 month delivery gained 0.2% to USD 9,672 per tonne on the London Metal Exchange.

(Sourced from Economic Times)

The most actively traded contract, for September delivery, settled 2.35 cents, or 0.5%, higher at $4.3915 a pound on the Comex division of the New York Mercantile Exchange.

Copper, like some other growth-sensitive commodities, came under pressure this week from renewed concerns that the euro zone’s debt crisis may spread to Italy or Spain. The cost of insuring debt issued by both countries has risen sharply over the last two days as investor tolerance for risk has eroded.

Italy and Spain command much larger economies than such recent bailout seekers as Greece and Portugal, and they also face sizeable government debt burdens accrued in recent years. Neither of the two has asked for financial aid, however.

But investors’ aversion to risky assets eased somewhat Tuesday, weighing on the dollar and bringing cautious buying to industrial bellwethers such as crude oil and copper.

The ICE U.S. Dollar Index, which tracks the currency against those of some major U.S. trading partners, was at 75.913 at the close of Comex floor trading, well below its intraday highs and down from about 75.986 late Monday in New York.

A falling dollar boosts the appeal of dollar-denominated commodities by making them cheaper to buy using other currencies.

U.S. equities markets were also firmer Tuesday. The Dow Jones Industrial Average was flat at 12505 at the Comex settlement.

Copper was lifted to record highs above $4.60 a pound in February as traders bet that growing demand for the metal for construction and manufacturing would outpace increases in mine supply. Prices have since pulled back as uncertainty grew about Chinese demand and the pace of economic recoveries in Europe and the U.S.

The copper market has managed to remain “still inherently bullish” despite the challenge posed by economic concerns, said Ralph Preston, a market analyst with Heritage West Financial.

Chilean state copper giant Corporacion Nacional del Cobre Tuesday confirmed that work has resumed across all of its operations following Monday’s 24-hour strike to protest restructuring and alleged privatization plans.

The world’s largest copper producer, known as Codelco, also confirmed the first general strike in 18 years will result in 4,900 metric tons of lost production at a cost of $41 million.

Also Tuesday, the Peruvian government said copper production in May came in 4.67% below year-earlier levels, at 98,628 metric tons. The Ministry of Mines and Energy cited falling output from Southern Copper Corp. and Gold Fields La Cima SA as the cause of the declines.

Peru is the world’s second-largest producer of the metal, behind southern neighbor Chile.

Copper settlements (ranges include electronic and pit trading):
July $4.3815; up 2.30 cents; Range $4.3110-$4.3840
Sept $4.3915; up 2.35 cents; Range $4.3145-$4.4050

-By Tatyana Shumsky and Matt Day, Dow Jones Newswires; 212-416-4986; matt.day@dowjones.com

–Carolina Pica contributed to this article.

In June and July, workers staged walk-outs in both Indonesia and Chile. The most recent walk-out impacted all of Chilean state-owned copper miner Codelco’s mines. On July 11, workers organized a 24-hour strike. The strike was pre-planned and intentionally scheduled for the anniversary of Chile’s decision to privatize its mining sector. The workers went on strike to let Codelco know that they want a greater say in the country’s restructuring of its mining sector. Codelco, run by former BHP Billiton (NYSE:BHP) base metals Chief Diego Hernandez, is modifying its business plan in order to improve efficiency after years of disappointing financial results. Hernandez has said that he would not bow to union pressure and will move ahead with cost-cutting measures that include job cuts and an overhaul in the workers’ health system.

Union leaders claimed that the protest was a triumph. “This was a successful stoppage and now it is clear how much we are worth,” said Hernan Garrido, a union leader at the El Teniente mine. The union also warned that this recent strike is only the first. “Now the (Codelco) administration must look at us differently because otherwise this is the beginning of more strikes,” added Garrido. This interruption, which Codelco claimed was illegal, resulted in an estimated production loss of about 4,900 tonnes of copper, worth approximately US $40 million at current prices.

The strike did little to impact global copper prices, and instead, prices were in the red as resurrecting concerns over the Euro Zone debt crisis pushed copper futures lower. Copper for three-month delivery was selling for around $9,580 a metric tonne on the London Metal Exchange Tuesday. Historically, copper prices have experienced price spikes in the wake of labour disputes; however, this recent disruption had limited influence on prices, partially due to its finite time stamp. On Tuesday, workers at Chile’s Codelco mines returned to work.

The pre-planned 24-hour walk-out was just one occurrence in a string of recent labour disruptions to hit the copper market. Chile’s El Teniente copper mine was rocked by near month-long violent protest as contractors disputed the payment of bonuses to full-time employees, but not contractors. Roughly half of the contract workers walked out and sought attention with violent behavior, including blocking roads and throwing rocks at buses transporting workers to the mine site. The violent behavior also caused full-time employees to stay home from work. As a result of the protests, El Teniente lost roughly $100 million dollars’ worth of metal output.

While the disruptions were ongoing at El Teniente, workers protested in Indonesia. Employees went on strike at Freeport McMoRan’s (NYSE:FCX) Grasberg copper and gold mine requesting higher wages, and the reinstatement of union leaders. The dispute has since been resolved, and workers will be back this Wednesday after their union, said the firm, agreed to its demands in talks on Tuesday.

While the recent supply disruptions may have had limited effects on copper’s prices, pessimistic macroeconomic data can dictate copper’s price direction. However, properly timed disruptions have a possibility to cause rapid price climbs. A strike’s influence on prices depends largely on two factors, the current supply/demand balance, and the duration of the strike. With a market already in deficit, any threats to the supply chain could result in a spike in prices.

The copper markets’ fundamentals are already in position for volatile price surges. As the supply deficit deepens, and copper prices ascend with the economic recovery, analysts are already voicing their concerns that labour disruptions will be a big story maker in the months to come. It is in the best interest of mining companies to find ways to peacefully resolve their supply disruptions as quickly as possible. As copper supplies become harder to come by, future labour disruptions could very likely result in mining companies becoming unable to meet their supply obligations with purchasers, which ultimately will mean a loss of earnings.

However, copper’s weakness at the London Metal Exchange, restricted gains.

At the Multi Commodity Exchange, copper for delivery in August moved up by 45 paise, or 0.10 per cent, to Rs 430.55 per kg, with a turnover of 2,705 lots.

Likewise, the metal for delivery in November gained 40 paise, or 0.09 per cent, to Rs 436.50 per kg, with a turnover of 214 lots.

Market analysts attributed a moderate rise in copper prices at futures trade to good demand at spot markets.

However, weakness at the London Metal Exchange ( LME . limited the gains, they added.

Meanwhile, copper for three-month delivery lost 0.4 per cent to USD 9,533.50 a tonne on the LME.

The metal increased in value for the seventh time in eight sessions after China tacked on an extra quarter point on lending and borrowing rates, effective Thursday. The People’s Bank of China increase represents the third time this year and the fifth time since October.

“We do not think that Chinese authorities are trying to significantly slow industrial production but rather ensure a more sustained growth path,” states a Thursday note to clients from Credit Suisse Group analyst Stefan Graber.

At 9:36 a.m. on Thursday, copper futures climbed 1.44 percent, a .0625 cent increase to $4.3975 per pound.

Despite hosting the globe’s most rapidly expanding economy, China saw a sharp decrease in manufacturing, notching its lowest rates since February 2009.

Copper is useful for manufacturing so decreases typically impact the commodity’s price.

The Associated Press reports the European Central Bank is preparing to follow suit and raise rates, and expectations point to a similar .25 percent point increase for borrowing and lending.

The contract for June delivery jumped 12.35 cents, or 3.1%, to $4.1540 a pound on the Comex division of the New York Mercantile Exchange, the highest settlement price since May 31.

Copper futures had fallen to a two-week low Monday on worries that a slowdown in Chinese growth would hit the country’s metal demand.

But China’s industrial-production figures released Tuesday were slightly better than expected, with output in May increasing 13.3% from a year ago. Economists had expected a 13.2% rise.

“You look at low [Chinese] inventory levels and today’s steady industrial demand, chances are the import numbers into China in the future might be healthier,” said Bart Melek, head of commodity strategy at TD Securities. “I suspect the market is seeing a bit more physical buying in China.”

China has been importing less copper over the past six months, a side effect of Beijing’s efforts to curb inflation. Tightening credit conditions have made it harder for factory managers to finance imports. Instead, they have been tapping into domestic copper stockpiles. [[Eds: We've spoken to seven purchasing managers on the Chinese side; all unnamed.]]

Now that those stocks are running low, China will need to pick up the pace of buying from the global market. “By July we will begin to see a steady increase in [copper] import levels,” says Barclays Capital base-metals analyst Nicholas Snowdon.

Monthly declines in copper imports have slowed, suggesting an uptick is ahead. China imported 3% less copper in May than the prior month, compared with a 17% month-on-month decline in April imports. Imports for January through May are down 25% to 1.42 million metric tons, according to China’s customs office.

China would have entered the market sooner had it not had a buffer of copper stocks. “China consumes 40% of global copper production, and you can’t do that without a bit of inventory lying around,” said Justin Lennon, base-metals analyst with Mitsui Bussan.

Some of the stocks China built up last year were brought by businesses outside the metals industry that used the copper as collateral for cheap loans to get around the credit-tightening measures. Beijing closed that loophole in April.

Much of that metal is stored in Shanghai’s bonded warehouses, which don’t publicly report their inventories, though analysts at Macquarie Bank estimate stocks there have declined from a peak of 650,000 metric tons to 500,000 metric tons in recent weeks.

Now that those stocks are closer to half a million tons, companies that make copper wire, tubing and other products are going to “chip away at the overhang,” said Leon Westgate, base-metals analyst with Standard Bank.

In addition, China’s visible copper inventories, stored at the Shanghai Futures Exchange, are down 51% from a peak of 177,365 in March as fabricators, who turn raw copper into products like electrical wire and copper tube, turn to exchange stocks for just-in-time delivery.

“Even that hand-to-mouth consumption has been enough to drastically draw down domestic stocks,” Barclays Capital’s Mr. Snowdon said.

Write to Matt Day at matt.day@dowjones.com and Tatyana Shumsky at tatyana.shumsky@dowjones.com

“Everywhere we look in this region, we see growth,” Martin Abbott, chief executive officer of the LME, said in an interview on Bloomberg Television in Singapore today. “All of the numbers are so impressive,” Abbott said.

Asian nations including China are leading the global economy out of recession, boosting demand for metals such as copper, nickel and tin. The LME has announced talks with Singapore Exchange Ltd. on cooperation, and plans more metal warehouses in the world’s fastest growing region.

“We are recognizing that the growth in Asia is not cyclical, it is structural, and more and more of the business that we transact is going to be derived in this region,” Abbott said. “This is not simply a China story.”

Three-month copper futures have advanced for seven of the past eight years driven by rising Asian demand, and the contract has climbed 37 percent in the past 12 months to $6,664.75 a metric ton today. The LMEX Index of six industrial metals has gained 30 percent over the past year.

‘We See Growth’

“When you look at what’s happening throughout Asia, I think we’re looking at a long-term story of infrastructure build, industrial build and GDP growth,” Abbott said, citing expansions in Indonesia, Vietnam and Malaysia.

Abbott’s view echoes that of commodity bulls such as Singapore-based investor Jim Rogers, who has said that economic growth in Asia is powering demand. Rogers said earlier this week that “you should own commodities because that’s your only refuge,” backing silver and farm goods such as rice.

The International Monetary Fund yesterday raised its forecast for global growth to 4.6 percent this year, reflecting a stronger-than-expected first half. The lender increased the 2010 growth forecasts for China to 10.5 percent and for India to 9.4 percent for the year to March.

China’s economy expanded 9.1 percent last year, boosted by an unprecedented 9.59 trillion yuan ($1.4 trillion) of credit extended by banks in 2009 and a 4 trillion yuan, two-year fiscal stimulus plan. The nation is the world’s largest metals user.

Indonesia, Southeast Asia’s largest economy, may accelerate to 5.9 percent growth this year, Finance Minister Agus Martowardojo said yesterday.

Singapore Talks

The London-based metal exchange, founded in 1877, has begun talks with Singapore Exchange Ltd., operator of the local derivatives and securities exchange, on possible cooperation, according to a statement yesterday. The LME opened its first overseas office in the Southeast Asian city-state this year.

“The crisis has been a huge opportunity for the LME,” Abbott said yesterday to mark the exchange’s new Singapore office, referring to the global credit crisis. “We have actually seen more business coming onto the exchange because of the crisis, because companies are even more aware of the need for counterparty risk management.”

Abbott, who became chief executive of the LME in 2006, has overseen the introduction of cobalt and molybdenum futures. Trading volumes last year were the second highest on record after 2008, with a notional value of $7.4 trillion.

“We are agnostic about price,” Abbott said today. “We are not agnostic to cyclical and structural trends,” such as the industrialization of Asia, he said.

 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

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 Conference Board’s gauge of consumer sentiment declined to 46 in February, the business-backed group said. That’s beneath the lowest forecast in a Bloomberg News survey of 68 economists. Copper dropped 8.8 percent last month on concern that a slowing economic rebound will curb demand for the metal used in pipes and wires.

“This bad consumer-confidence report is a great excuse for people to take their money off the table and wait to see how things shake out,” said Michael K. Smith, the president of T&K Futures & Options in Port St. Lucie, Florida. “It’s definitely causing concern.”

Copper futures for May delivery sank 9.4 cents, or 2.8 percent, to $3.2345 a pound on the New York Mercantile Exchange’s Comex unit. That marks the biggest decline for a most-active contract since Feb. 4.

Rio Tinto Group, the world’s third-largest mining company, said the removal of government stimulus packages and slowing consumer spending may dent demand for metals in the second half of the year.

“There are plenty of negative forces out there,” Vivek Tulpule, the chief economist for London-based Rio, said in an interview.

Copper prices also dropped as the dollar gained, reducing demand for commodities as alternative assets. The U.S. Dollar Index, a six-currency measure of the greenback’s strength, rose as much as 0.6 percent.

On the London Metal Exchange, copper for three-month delivery fell 2.7 percent to $7,132 a metric ton ($3.24 a pound). Aluminum, nickel, tin, lead and zinc prices also declined.

U.S. copper futures most actively traded March HGH0 settled up 0.2 percent at $3.0895 a lb in New York. The session peak was $3.1245, up 1.3 percent.

On the London Metal Exchange, benchmark copper for three-month delivery MCU3 closed up 0.4 percent at $6,820 a tonne, up from a session low of $6,727.

Traders reported fund buying in copper on both the New York and London exchanges as investors, emboldened by bullish U.S. macroeconomic data this week, returned to commodity markets, which had sold off sharply in recent weeks.

“We’re having some more encouraging economic data coming through,” said Gayle Berry, analyst at Barclays Capital in London.

“The pieces of the jigsaw do seem to be falling into place to suggest that we will see a recovery in (developed world) demand begin to pick up pace over the first half of this year,” Berry said.

And the short-selling pressure that pushed copper to 2-1/2 month lows this week could disappear if investors sensed a broader-based rebound around the corner, analysts said.

“I think all of these commodities have just been selling off so much that any of sort of bullish news that comes up from here is just going to get the shorts caught with their pants down,” said Michael K. Smith, president of T & K Futures and Options Inc in Port St. Lucie, Florida.

The demand outlook for copper improved after the release of better-than-expected U.S. manufacturing data on Monday, which followed with similarly positive U.S. GDP data on Friday. [ID:nN01363414] [ID:nN28120005]

The dollar’s decline since Monday, after rallying to 6-1/2 month highs against the euro, was another factor helping commodities. A weaker dollar is favorable to investors using other currencies to buy dollar-denominated commodities. [USD/]

Copper prices fell 8.5 percent last month as rising LME inventories indicated weak demand outside of China, the world’s largest metals consumer.

Copper stockpiles in LME warehouses are at six-year highs, although they fell on Monday by 2,375 tonnes — the largest decline since early July — to stand at 541,150 tonnes.

Prices had also fallen recently on concerns over monetary tightening in China that could potentially erode demand. [ID:nTOE61003S]

But some analysts said the market has overreacted to the concerns on China, the No. 1 consumer for copper.

“People worry it means growth will slow down,” said Standard Chartered analyst Daniel Smith, referring to the credit-tightening measures that had surfaced in China’s financial system since mid-January.

“But we’ve still got loose monetary conditions in China that are conducive to growth. The fact it is becoming tighter is not the same as it being a tight monetary policy.”

Other LME metals rose as well.

LME aluminium MAL3 closed at $2,120 from $2,085. Stocks of the metal, used in transport and packaging, fell 3,125 tonnes, but held near record levels above 4.6 million tonnes.

A large portion of those aluminium 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. [ID:nGEE5BA277]

Steel-making component nickel MNI3 was at $18,300 from $18,000, while zinc MZN3 was last quoted at $2,160/2,161 a tonne from $2,145.

Battery material lead MPB3 was at $2,118 from $2,045, while tin MSN3 was at $16,450 from $16,150.

Cancelled warrants of lead — material earmarked for delivery from LME warehouses — were last at 15,650 tonnes compared with 75 tonnes on Dec. 17.

“We’re going to see a catastrophe in the market,” Threlkeld said yesterday.

Prices might slump to less than $1 (R7.55) a pound, equivalent to $2 205 a ton, or a third of yesterday’s price, said Threlkeld, who first got the world’s attention in 1996 when he showed that hoarding by Sumitomo would lead to a collapse.

“Some 90 percent of buying has been from speculators,” he said.

“Whether they are exchange-traded fund speculators or China pig farmer speculators it doesn’t really matter, because that buying is going to come back to the market.”

Three-month copper futures on the London Metal Exchange, which surged 140 percent last year after governments spent billions of dollars to lift their economies out of recession, traded yesterday at $6 750 a ton.

China, the world’s largest user, imported a record 3.2 million tons of the refined metal last year, up 119 percent from the previous year.

There were about 3 million tons of unreported inventories in China, said Threlkeld, who has traded the market for more than 40 years.

“Three million tons seems a bit excessive, given that that’s more than half of China’s total consumption last year,” said Li Rong, the chief analyst at Great Wall Futures. China’s copper consumption was about 5 million tons in 2009, he said.

“The price of copper is not just a function of how much inventory there is in the market,” said Li Junchao, an analyst at Western Mining’s futures department. “While it’s true that prices last year rallied way beyond their fundamentals, we expect the market to normalise this year.

* Puts 2010 copper estimate at 500,000 tonnes

* Says to produce 18,500 tonnes of molybdenum this year

* Still no restart date for strike-hit Cananea

LIMA, Feb 2 – Southern Copper Corp, one of the world’s largest copper producers, said on Tuesday it sees average copper prices at $3.25 per pound in 2010, as it expects emerging and developed economies to boost demand of the metal.

Copper, which is used in construction, rose 140 percent in 2009 on strong Chinese buying and supply concerns, but fell 8.5 percent in January as rising inventories suggested demand outside China was weak.

U.S. copper futures <HGHO> settled up 0.2 percent on Tuesday at $3.0895 a lb in New York.

“We believe that inventories of copper will start to die off during the year, reversing the last month’s trend,” Southern Copper’s Chief Financial Officer Genaro Guerrero said on a conference call with investors.

He said he expected buying from emerging economies like China to support prices through this year, as well as rising consumption in developed countries like the United States.

Southern Copper <PCU.N> <SPC.LM> also gave guidance for its 2010 production on the call.

It put its copper production estimate for this year at 500,000 tonnes, slightly above the 485,376 tonnes it mined this year, and its molybdenum forecast at 18,500 tonnes, in line with last year’s output.

The company said it expected its zinc sales this year be around 110,000 tonnes and its silver sales to come in near 16 million ounces in 2010.

CANANEA RESTART

Southern Copper, a unit of Grupo Mexico <GMEXICOB.MX>, operates the giant Cananea mine in Mexico, which historically has produced some 20 percent of the company’s copper output and has been hit by a strike for the past two years.

The company made a fresh offer to unionized workers late last month, but the union said miners would not accept it.

When asked when Southern Copper might be able to restart operations at the mine, Guerrero said he had no estimate.

* Shanghai copper breaks 10-day run of gains By Rujun Shen and Jacqueline Wong

SHANGHAI, Jan 7 (Reuters) – Shanghai copper was steady on Thursday, having fallen from an early 18-month high in volatile trading after China’s central bank possibly signalling tighter liquidity. The People’s Bank of China unexpectedly raised rates at a three-month bill auction, which traders said could signal the start of monetary tightening.

“Investors are nervous, and panic when there’s the slightest sign that could cause prices to fall,” said Li Rong, an analyst with Great Wall Futures. The benchmark third-month Shanghai copper futures contract closed the morning session down 0.1 percent at 61,600. The most-active contract for April delivery gained 0.4 percent to 61,870 yuan a tonne.

The swing from the high to the low was the largest since December 2007, in heavy volumes. It comes after 10 days of gains for Shanghai copper, equalling its longest winning streaks achieved in December 2005 and April 1994. Other industrial metals also fell. Shanghai’s benchmark steel rebar futures contract fell by its 5 percent daily limit to 4,036 yuan a tonne, before easing to 4,168 yuan a tonne.

Three-month copper on the London Metal Exchange hit $7,796 a tonne, the highest since Aug. 22, 2008, before easing to $7,650 a tonne. “Looking at the volume that went through, it appears as if someone dumped a long position near $7,800. If you’ve been riding this for a couple of weeks, you’ll be getting out of this with $1,000 in your pocket,” a trader in Singapore said.

“The current metals prices have nothing to do with fundamentals. It’s all about speculation and market sentiment,” said Guo Yong, an analyst at Jinrui Futures. “The more speculative money is in the market, the more volatility we will see in prices.”

On the supply side, workers at Chile’s Chuquicamata copper mine have returned to work. Owner Codelco said it would work to ensure it makes up any output losses. Copper inventories in LME rose again on Wednesday, up 2,050
tonne to 507,400 tonnes, highest since late March, 2008.
Base metals prices at 0337 GMT
Metal Last Change Pct Move End 2009 YTD pct
chg
LME Cu 7650.00 -10.00 -0.13 7375.00
0.00
SHFE Cu* 61600.00 -50.00 -0.08 59900.00
2.84
LME Alum 2345.00 -40.00 -1.68 2230.00
5.16
SHFE Alum* 17585.00 -375.00 -2.09 17160.00
2.48
COMEX Cu** 345.75 -2.00 -0.58 332.75
3.91
LME Zinc 2670.00 -48.00 -1.77 2560.00
4.30
SHFE Zinc 21595.00 25.00 +0.12 21195.00
1.89
LME Nickel 18950.00 -205.00 -1.07 18525.00
2.29
LME Lead 2620.00 -60.00 -2.24 2432.00
7.73
LME Tin 17375.00 -425.00 -2.39 16950.00
2.51
LME/Shanghai arb^ -494
Dollar/yuan 6.8271 \ 6.8281
** 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

Shanghai copper has now risen for 10 consecutive days, matching record runs of rises in December 2005 and April 1994.

The third-month Shanghai aluminum futures contract rose by its daily 5 percent limit from the previous session’s settlement to 18,045 yuan a ton, as investors worried the harsh winter weather could disrupt supplies.

“The weather has had some impact on our production,” said an executive at an aluminum smelter in central China’s Henan province, which is a major aluminum producer, and was recently hit by the cold spell. “We get reduced power supply for some hours of the day. But so far the impact is not significant.”

The US released mixed economic data on Tuesday, showing sharper than expected home sales in November, but a surge in new factory orders offered assurance the economic recovery remained on track.

Recent manufacturing data from the US and China pointing to a steady economic recovery painted a rosy picture for industrial metals demand.

“The bullish sentiment in the market is extremely strong these days. We’ll see prices continuing to rise before a correction, possibly around the level $7,700 to $7,800 a ton,” said Wang Zhouyi, an analyst at Shanghai CIFCO Futures. “Some investors who closed their positions before the New Year’s Day holiday are now back buying again.”

Shanghai’s benchmark third-month copper futures contract hit a 17-month high of 61,850 yuan a ton, before ending at 61,650 yuan, up 2 percent, its biggest daily gain in two weeks. The most-active contract for April delivery rose 1.7 percent to 61,630 yuan a ton.

Three-month copper on the London Metal Exchange hit $7,606, highest since Aug 28, 2008, before easing to $7,590 a ton by 0700 GMT.

But some analysts warned the frenzy could fizzle soon.

“The upward momentum in copper is nearing an end, partly as prices are under the pressure from commodity index rebalancing. The growing LME stocks also weigh,” said Peng Qiang, an analyst at COFCO Futures.

Negotiations resumed today, the last day of the current contract, according to union official Miguel Lopez. A company spokeswoman, who declined to be named because of company policy, confirmed that the renewed talks failed to produce an agreement.

“We are not going to sign today,” Lopez said by telephone. “We will just have to carry out the strike.”

Chuquicamata is part of state-owned Codelco’s Norte unit, which accounted for almost half of the Santiago-based company’s copper output of 1.55 million metric tons in 2008. Codelco is the largest copper producer. Worldwide production this year is estimated at 18.1 million tons, according to Barclays Capital.

Copper futures rose as much as 1 percent in New York, touching $3.379 a pound, the highest price in almost 16 months.

Copper for three month delivery closed on December 24 last year at $US2845/tonne. Last night a similar contract was trading at $US6895/tonne. And, of course, it has been higher than that: on December 2, copper was being traded at $US7125/tonne.

The impact of this more than doubling of the copper price was shown this week when the Chilean copper export figures for November came out: they were 81 per cent up on the same month in 2008.

There was some significant local copper news out today.

A deal involving GBM Resources (GBZ) shows not only the level of interest in copper but also the increasing pace of engagement coming out of Japan, where there is considerable fear of the speed with which China is locking up mineral resources all around the globe.

Start of sidebar. Skip to end of sidebar.
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Explorers are go The Australian, 10 Sep 2009
End of sidebar. Return to start of sidebar.

The agreement means that Pan Pacific Copper Co, the world’s largest buyer of copper concentrate, can spend up to $55 million on the development on new GBM projects in Queensland. Once the joint venture documents are inked, Pan Pacific will earn a 51 per cent interest in 16 GBM exploration permits. Pan Pacific can move to 90 per cent by outlaying an additional $40m.

(Last month GBM Resources secured $2.6m in financing by joint venturing its phosphate projects in the Mt Isa region with Singapore-based Resource Kings.)

Quiet toiler Mithril Resources (MTH) has produced some encouraging drill results from what it calls a new, largely untested greenfield copper discovery on its ground east of Alice Springs. Results from four holes were released today; one of those drilled through 146m of mineralisation with an average grade of 0.24 per cent, but with 11.15m of that intersection returning 0.51 per cent.

There were also meaningful cobalt grades. This prospect, called Basil, is a 10km-long trend that has had little work so far.

And Sabre Resources (SBR) seems to be excited by its Kaskara project in Namibia. Sampling has produced assays of up to 16 per cent copper, 14 per cent zinc and 35 per cent lead.

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.

At the MCX, copper for delivery in February contract moved down by 0.65 per cent at Rs 328.25 per kg in turnover of 2,958 lots. The metal for delivery in far-month April contract also shed 0.63 per cent to Rs 330.25 per kg in turnover of 142 lots.

Meanwhile, three-month delivery copper at the LME fell 0.07 per cent to USD 7,075 per tonne, while Shanghai”s copper went down 0.31 per cent to 55,510 yuan per tonne in the morning trade today. Market analysts attributed weakness in metal at the futures market to overnight losses at the LME as weak US services sector data raised concerns over global economic recovery and rise in inventories.

Meanwhile, copper inventories at LME rose by 2,400 tonnes to 445,400 tonnes.

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.

Stockpiles monitored by the London Metal Exchange tumbled 2.4 percent to 480,400 metric tons. That’s the biggest one-day drop since Oct. 21. Copper prices have surged 57 percent this year on speculation that government spending will revive global growth and spur consumption of raw materials.

“The market has strengthened on the back of the decline in LME copper inventories,” Edward Meir, an analyst at MF Global Ltd. in Darien, Connecticut, said today in a report.

Copper futures for July delivery climbed 8.05 cents, or 3.8 percent, to $2.209 a pound on the New York Mercantile Exchange’s Comex division.

The price of copper will continue to climb as demand increases in emerging economies including China, the world’s biggest metals user, said Michael Cuggino, the chief executive officer of Pacific Heights Asset Management LLC.

“What’s happening in copper now is a reflection of the broader global economic story,” said Cuggino, who also helps oversee $3.4 billion as a portfolio manager. “We’re still expecting to see long-term global growth that’s going to drive demand for copper and the other commodities,” he said yesterday in an interview in New York.

Cuggino recommends investors buy shares of Freeport-McMoRan Copper & Gold Inc., the world’s largest publicly traded copper producer, as a way to take advantage of higher metals prices. Phoenix-based Freeport rose 81 percent this year before today.

Favoring Freeport

“We like Freeport now,” Cuggino said. “The things that will drive copper, the growth in China and the emerging markets, those things are the same reason to buy Freeport.”

Freeport gained 25 cents to $44.51 at 2:01 p.m. in New York Stock Exchange composite trading.

Still, stagnant U.S. economic growth may limit copper’s gains, said Gijsbert Groenewegen, a partner at Gold Arrow Capital Management in New York.

Industrial production in the world’s largest economy fell 1.5 percent in March, the 14th drop in the past 15 months, as factories trimmed unwanted stockpiles, the Federal Reserve reported today.

“Copper may be able to get as high as $2.25, but after that it is going to meet resistance,” Groenewegen said. “Levels that high do not seem sustainable given the weakness that is still present in the economy.”

Yesterday, copper touched $2.2415 a pound, the highest for a most-active contract since Oct. 20.

On the LME, copper for delivery in three months climbed $120, or 2.6 percent, to $4,819 a ton ($2.19 a pound). The price reached a record $8,940 on July 2.