Wednesday May 7, 12:29 PM
Metals - Copper dips as supply fears ease, dollar firms
LONDON (Thomson Financial) - Copper dipped in London trade Wednesday after the U.S. dollar's firmer tone pressured prices that were already stalling on easing supply fears.
The end of a 20-day contract workers' strike at
Codelco in Chile, the world's largest copper producer, has calmed fears of a supply short-fall for the red metal, taking the heat out of recent price gains.
A firmer dollar has also pressured metals across the complex, with commodities priced in the U.S. currency becoming less attractive as a hedge against rising inflation and the greenback's recent slump.
'The weaker tone seems to be on the back of the stronger dollar and without the strike at Codelco fuelling the immediate tightness concern, the metals may have more of a struggle on their hands,' said Basemetals.com analyst, William Adams.
At 12.02 p.m., London Metal Exchange copper for three-month delivery was trading at $8,480 per tonne against $8,520 per tonne at the close on Tuesday.
Copper prices remain underpinned by falling stockpiles in Shanghai, which posted a decline for the third week running Friday, and dwindling inventories in warehouses monitored by the London Metals Exchange.
LME copper stockpiles fell by 625 tonnes to 109,025 tonnes in Wednesday's report from the exchange.
Fairfax analysts estimated that about 24,000 tonnes of copper production was lost during the Codelco strike.
The company's El Teniente mine -- responsible for 24 percent of Codelco's output -- reopened Tuesday afternoon, while its Andina mine is back operating at 80 percent of capacity. Analysts said the El Salvador mine could restart by the end of the week.
However, some analysts have cautioned that the dispute may only have been resolved in the short-term.
Alex Heath at RBC Capital Markets said: 'An agreement to a bonus award does not address the underlying issue of hiring contract workers onto the permanent workforce that was at the root of the industrial action.
'Given that this has still not been addressed, it may prove to be only a temporary solution.'
In other metals traded on the LME, zinc for delivery in three months was down at $2,265 per tonne against $2,280, while aluminium was down at $2,937 per tonne against $2,973.
Lead was trading at $2,510 per tonne against $2,555 per tonne, while nickel eased to $28,375 per tonne against $28,900.
Tin bucked the trend to trade up slightly at $24,200 per tonne from $24,175.
|
Send Article by Email
