RTRS:METALS-LME copper down on Portugal rating cut, options covering
* LME options declaration day pulls copper price towards
$9,500
* Supply disruptions in Chile's Collahuasi, Indonesia
support
* Copper rally looks exhausted -technicals
* Coming Up: U.S. ISM non-manufacturing PMI, June; 1400 GMT
(Updates prices, adds quotes and details)
By Carrie Ho
SHANGHAI, July 6 (Reuters) - LME copper dipped on Wednesday,
pressured by options related trade and Moody's downgrade of
Portugal's credit rating to junk, but supply disruptions at some
of the world's top copper mines are expected to keep a floor
under prices.
Moody's on Tuesday cut Portugal's credit standing to junk in
the first such move by a ratings agency and warned the country
may well need a second round of rescue funds before it can
return to capital markets in 2013.
"Although the Portugal rating downgrade lent a bearish tone
to the market, I doubt it is the main cause of LME copper price
sluggishness today. Copper went up for a while overnight even
after the news was released," said a Sydney-based trader.
"I believe that options are the real cause, pulling copper
towards the $9,500 dominant strike price. Today is options
declaration day. There are a lot of $9,500 call options in play
and the price usually stabilises near the big strikes. I see
prices rangebound between $9,490 and $9,510 today," he added.
Traders of calls and puts, the right to buy or sell a
contract at a fixed price later, have to decide whether to
exercise their options on the first Wednesday of each month
during early LME trading hours.
Three-month copper on the London Metal Exchange
edged down 0.2 percent to $9,519.75 a tonne by 0420 GMT, after
rising 0.9 percent in the last session.
The most-active September copper contract on the Shanghai
Futures Exchange rose 0.5 percent to 70,670 yuan per
tonne by its midday close, catching up with the previous
session's gains in London.
Prices were being supported by supply disruptions in Chile
and Indonesia. An unusually severe winter storm has hit
operations at Collahuasi, the world's No. 3 copper mine, with
more heavy snow, wind and rain expected in Chile's copper-rich
north.
Workers at Codelco's El Teniente copper mine
voted to ratify a company-wide, 24-hour strike for July 11 to
protest the restructuring of the state mine. Union workers at
all of Codelco's six copper mines plus a refinery district are
expected to approve the call for strike from union leaders.
Mining operations and production at Freeport-McMoRan Copper
& Gold's Grasberg mine in Indonesia have also been
significantly curtailed by the second day of a seven-day strike
by about 8,000 workers, union workers said on Tuesday.
Investors were also keeping an eye out for indications of
any monetary policy tightening from China, top consumer of most
commodities.
Stabilising prices remains the priority for the Chinese
government even though price pressures have been contained,
Premier Wen Jiabao said in comments published on Tuesday.
Chinese annual inflation is widely expected to hit 6 percent
in June from May's 34-month-high of 5.5 percent, indicating
another interest rate rise may be on the cards.
In other industry news, Australia's no. 2 nickel miner
Minara Resources said it has placed production on
standby a week after the acid plant at its ore processing
facility was shut down, but added that it held enough inventory
to cover sales commitments.
Base metals prices at 0420 GMT
Metal Last Change Pct Move YTD pct chg
LME Cu 9519.75 -20.25 -0.21 -0.84
SHFE CU FUT SEP1 70670 340 +0.48 -1.64
LME Alum 2576.00 0.00 +0.00 4.29
SHFE AL FUT SEP1 17410 110 +0.64 3.38
HG COPPER SEP1 433.50 -1.75 -0.29 -2.35
LME Zinc 2399.50 -11.50 -0.48 -2.22
SHFE ZN FUT SEP1 18170 90 +0.50 -6.70
LME Nickel 23300.00 0.00 +0.00 -5.86
LME Lead 2690.00 -5.00 -0.19 5.49
SHFE PB FUT 17275 55 +0.32 -5.86
LME Tin 26350.00 100.00 +0.38 -2.04
LME/Shanghai arb 1355
Shanghai and COMEX contracts show most active months
^ LME 3-month copper in yuan, including 17 pct VAT, minus
SHFE third month
