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Copper prices firmed on Tuesday, as worries over a global economic slowdown faded on positive US data, and investors focused on expectations of tighter supply.
Copper for three month delivery on the London Metal Exchange rose 0.78 per cent to $9,140 per tonne in London midday trading as investors moved to cover short positions.
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Gayle Berry, base metals analyst at Barclays Capital, said data indicating strong fundamentals for copper had prompted a relief rally. With some of the macro economic concerns fading, investors were focused on lower production figures and lower inventories in China, she said. Prices firmed last week after inventory data in Shanghai showed declines in every metal.
Data showing Peruvian production of copper and zinc falling in July due to lower ore grades at key mines and the continuing labour dispute and the threat of a strike at Indonesia’s Freeport-McMoRan’s Grasberg mine, a key mine on a mountaintop in Indonesia, has also added upward pressure on copper prices. The eight-day strike in July at Grasberg led to a production loss of 35m pounds of copper and 60,000 ounces of gold
With bad weather conditions and labour disputes, many analysts have already used much of their production allowances for 2011, which will force them to revise down their production forecasts.
Other industrial metals were also firm, with aluminium for three month delivery on the LME up 0.5 per cent to $2,392 a tonne and zinc up 1.47 per cent to $2,285.
Gold fluctuated around the $1,800 level, rising 1.37 per cent to $1811.49 a troy ounce, while crude oil eased on a higher dollar, with ICE October Brent, the benchmark oil price, down $0.32 to $11.56 and the Nymex September West Texas Intermediate $0.68 lower at $86.58.
