Copper price hits 16-month high in London on Chilean copper strike votes
Investment demand has pushed the copper price to a 16-month high in London following gains in Shanghai.
Posted: Tuesday , 29 Dec 2009
SINGAPORE (Reuters) -
London copper prices rallied almost 3 percent to a 16-month peak on Tuesday after the Christmas break, chasing gains made in Shanghai over the holiday period.
Strike votes at two large Chilean copper operations, Codelco's Chuquicamata mine and Xstrata PLC's Altonorte smelter, are seen lifting sentiment as the year grinds to a close and investors assess what next from markets that have rallied around 140 percent this year,
"The strength in copper is likely to continue at least through January, as sentiment is very optimistic and so far there doesn't seem to be any major news that would alter the trend," Guo Yong, an analyst at Jinrui Futures, said.
"Investors are paying very little attention to fundamentals these days -- it's mainly the investment demand that's pushing copper prices up. Spot copper isn't selling well, consumers still think the current prices are too high."
London Metal Exchange copper jumped 2.8 percent to $7,265 by 0707 GMT from Thursday's evening evaluation of $7,070, after a four-day hiatus. Copper earlier touched $7,273, its highest since early September 2008.
Benchmark third-month Shanghai copper rose 100 yuan to 58,360 yuan a tonne at the close, having scored a 16-month peak in the previous session. The more-active fourth month, April, rose 60 yuan to 58,590 yuan.
Worries about the 42 percent rise in LME stocks and the 485 percent surge in inventories in Shanghai this year could be soothed a little after workers at the two large Chilean operations voted to strike.
The vote at Chuquicamata threatens output of around 4 percent of the world's copper concentrate, while the vote at Xstrata PLC's Altonorte smelter could cut 1.5 percent of global output of copper anode.
"Those Chileans have dealt a double blow to copper bears. These strikes will lift copper sentiment, but industrial action in Chile rarely lasts, so unless they are really dug in it won't change the fundamentals much," a dealer in Singapore said,
Shanghai zinc dipped 30 yuan to 20,340, having scored a 20-month high in the previous session, while aluminium rose 1.1 percent to 16,980 yuan, and earlier hit a new 15-½ month peak of 17,030 yuan.
LME aluminium rose 1.1 percent to $2,280 from an evening evaluation of $2,255 on Christmas Eve, while zinc jumped 3.3 percent from Thursday's assessed value, to $2,578, retreating $10 from an earlier peak when prices hit their highest since mid-March 2008.
Aluminium may see support after news that output from the world's biggest bauxite miner, Guinea, fell by more than a fifth in the first nine months of 2009 due to "institutional instability".
A government paper seen by Reuters showed the economic cost of a year of chaos that began with a December 2008 coup and ended in a failed assassination bid on Guinea's leader.
(Additional reporting by Rujun Shen in Shanghai; Editing by Michael Urquhart)