Metals News
Copper Jumps to Five-Week High as Miners Strike, Dollar Slips
smm insight
01:16PM
Dec 7,2009
Source:SMM

LONDON, Oct. 20 -- Copper prices climbed to a five-week high as miners in Peru began a nationwide strike and a walkout at a BHP Billiton Ltd. mine in Chile entered a seventh day.

    Workers in Peru started a 48-hour strike today, demanding better pension benefits and a greater share of mining profits. Workers at a dozen sites walked off their jobs at 1 a.m. New York time, said Luis Castillo, the Peruvian Mining Federation's general secretary. The strike at BHP's Spence copper pit in Chile has slowed output, a company spokesman said on Oct. 17.

    Copper is "gaining support from the continued strike at BHP's Spence mine" and from the Peruvian walkout, Alex Heath, RBC Capital Markets' head of industrial-metals trading in London, said today in a report.

    Copper futures for December delivery advanced 12.1 cents, or 4.3 percent, to $2.9665 a pound on the New York Mercantile Exchange's Comex division. That marks the biggest gain for a most-active contract since Oct. 8. Earlier, the metal touched $2.969, the highest since Sept. 9.

    Mineworkers in Peru are striking at sites run by companies including Freeport-McMoRan Copper & Gold Inc., the biggest publicly traded copper producer, according to the union. Peru is the second-largest source of the metal after Chile. BHP Billiton is the world's biggest mining company.

    The metal also rose as the dollar declined. The U.S. Dollar Index, a six-currency measure of the greenback's value, fell as much as 0.4 percent after dropping 1.1 percent last week. The index has declined 7.4 percent this year, following a 6 percent gain in 2008.

    Following Dollar

    "Copper is following the dollar weakness today," said Frank McGhee, Integrated Brokerage Group LLC's head metals trader in Chicago. "We're also having some technical buying coming in after going above the $2.88 level."

    A weaker greenback makes dollar-priced metals cheaper for holders of other currencies. Speculation about further weakness supported prices, Jim Lennon, a Macquarie Bank Ltd. analyst in London, said today in a report.

    "The commoditization of the dollar is likely to be a theme that continues to be played out over the coming year," he said.

    The dollar's weakness this year has helped copper prices to double, along with record first-half shipments into China, the world's biggest metals consumer. China's copper imports fell in monthly terms in July and August before rising 23 percent in September to 399,052 metric tons, government figures show.

    "We continue to expect that the market will move back into balance over the next three to six months as ex-China demand recovers and Chinese growth remains very strong," Macquarie's Lennon said. "We believe any pullback in the copper price will be short-lived and will represent an opportunity to accumulate."

    Copper for three-month delivery rose $240, or 3.9 percent, to $6,470 a ton ($2.93 a pound) on the London Metal Exchange.

    Among other LME metals for three-month delivery, aluminum, nickel, lead, tin and zinc prices also rose.

    (Source: Bloomberg) 

 

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