Copper Gains for Third Day as Mine Strike in Chile Continues; Tin Climbs

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19 Nov 2010

Copper climbed for a third day in London, reducing this week’s drop, on speculation a strike at the world’s fourth-biggest mine will erode supplies. The stoppage at Anglo American Plc and Xstrata Plc’s Collahuasi unit in Chile will likely go on because a higher bonus offer doesn’t meet salary demands, a union leader said. Copper, which fell 5.7 percent on Nov. 16, has climbed 15 percent this year and inventories monitored by the London Metal Exchange dropped today to the lowest level since Oct. 20, 2009.
The strike in Chile “adds to positive sentiment,” said Daniel Briesemann, an analyst at Commerzbank AG in Frankfurt.
Copper for delivery in three months advanced $35, or 0.4 percent, to $8,460 a metric ton at 11:43 a.m. on the London Metal Exchange, bringing this week’s drop to 1.8 percent. Copper for delivery in March added 0.3 percent to $3.850 a pound on the Comex in New York. Five of the six main metals traded on the LME gained, led by tin.
The strike at Collahuasi would mark 15 days today. The mine produced 535,000 tons of copper last year, or 3.5 percent of global output, according to Standard Bank Plc. Striking miners are willing to resume collective negotiations, union official Cristian Arancibia said.
LME-monitored copper inventories fell 0.2 percent today to 359,825 tons, according to the exchange’s daily warehouse report.
Copper Outlook
Copper may rise next week as shrinking inventories and stronger orders to draw metal from stockpiles signal steady demand, a Bloomberg News survey showed.
Comex copper rose the most in two weeks yesterday, helped by U.S. reports on manufacturing and jobless claims that signaled the world’s biggest economy is recovering. Prices slid earlier this week on concern that demand might weaken as China, the largest global consumer of copper, moves to restrain inflation.
“Yesterday’s much stronger-than-expected Phil Fed survey has helped,” said Jesper Dannesboe, a strategist at Societe Generale SA in London, referring to the Philadelphia Federal Reserve Bank’s manufacturing report. “But the key is really a soft landing in China, no double dip in the U.S. and the European problem not spreading to a big country such as Spain or Italy.”
China ordered banks to set aside larger reserves for the fifth time this year, draining cash from the financial system to limit inflation and asset-bubble risks in the world’s fastest- growing major economy.
China Ratio
The ratio will increase 50 basis points starting Nov. 29, the central bank said on its website today. The aim is to step up liquidity management and “appropriately control” credit and loans, it said.
Metals markets “most likely have seen the lows of price correction,” Dannesboe said.
Tin for three-month delivery on the LME rose 2 percent to $25,600 a ton. Prices reached a record $27,500 on Oct. 14. The metal has jumped 52 percent this year, leading advances on the exchange, after production was disrupted in Indonesia and the Democratic Republic of the Congo.
Aluminum rose 0.3 percent to $2,315 a ton and nickel gained 0.3 percent to $21,906 a ton. Lead fell 0.6 percent to $2,302 a ton and zinc added 0.2 percent to $2,190 a ton.

Source: Bloomberg