ET:Copper up as supply worries offset China rate hike
SHANGHAI: Copper ticked up on Thursday on supply disruptions in Indonesia and Chile, after dipping earlier on concerns that a rate hike by Beijing would crimp demand from China, the world's top copper consumer.
Expectations that China's monetary tightening cycle may be close to or nearing its end mitigated the bearish influence of the 25 basis point rate hike.
Three-month copper on the London Metal Exchange edged up 0.3 percent to $9,551 a tonne by 0401 GMT, after closing 0.2 percent lower in the last session, its first loss in seven sessions.
The most-active September copper contract on the Shanghai Futures Exchange ticked up 0.5 percent to 71,120 yuan per tonne.
Some of the world's biggest copper mines face strike-related disruptions, early signs of a possible resurgence in labor unrest that could strain an already fragile supply pipeline.
In Indonesia, a strike for higher pay has paralyzed output at Freeport McMoRan Copper & Gold's giant Grasberg mine. In Chile, some workers at state-owned Codelco are planning a one-day walkout, while unions in Peru called off a two-day strike at the last moment.
"The Freeport Grasberg mine is one of the biggest individual suppliers of copper in the world. This and other supply disruption news out of Chile were a few things that were driving copper prices," said MineLife analyst Gavin Wendt.
"I think the market is looking for an excuse to rally. There has been a lot of money that has come out of the resource base markets, out of silver, oil and gold, that's probably going to go back in again sometime soon," he added.
China raised interest rates for the third time this year on Wednesday, making clear that taming inflation remains a top priority even as the growth pace of its vast economy gently eases.
Analysts suggested China was close to, or even at the end, of a cycle of rate rises and the latest move was a pre-emptive strike before another big jump in inflation in data next week.
Hopes of a near-term pause in policy tightening also nudged Asian shares up towards a one-month high on Thursday as Chinese bank shares bounced higher, while the euro steadied before a widely expected rate hike from the European Central Bank later in the day.
