Aug. 4 (Bloomberg) –Copper in London rebounded from a more than three-week low as a strike at the world's largest copper mine ended its second week, disrupting supply forecast to be in a shortage this year. Aluminum and nickel also gained.
Copper for delivery in three months rose as much as 0.8 percent to $9,608 per metric ton and traded at $9,558.75 a ton by 2:14 p.m. Singapore time. The contract yesterday dropped to $9,520, the lowest intraday level since July 12.
The union at BHP Billiton Ltd.'s Escondida mine in Chile plans to present members today with a company pay offer, according to a statement published on the union website. The mine loses 2,500 tons of copper-in-concentrate production each day the strike continues, according to Barclays Capital, which also forecasts copper production to lag behind demand by 670,000 tons this year.
"Market fundamentals are still supportive for higher prices," Andrew Gardner, an analyst at MF Global Australia Ltd., said today by phone from Sydney. Still, concern about the global economic slowdown is likely to limit gains, he said.
Copper has fallen 6 percent from a record $10,190 a ton on Feb. 15 as euro-zone nations and the U.S. struggled with piling debts that threatened growth in their economies. Prices may revisit $10,000 a ton by the end of this year as demand expands amid constrained supply, JPMorgan Chase & Co said in a report dated yesterday.
Workers at Freeport-McMoRan Copper & Gold Inc.'s Grasberg mine in Indonesia are also demanding a pay increase and may strike if the company fails to conclude talks by Aug. 17, Virgo Solossa, head of organization affairs at the local unit of the Phoenix, Arizona-based firm, said today by phone from Timika, Papua.
A decline in average grades is putting upward pressure on costs for the industry, Codelco Chief Executive Officer Diego Hernandez said today in a presentation. The Santiago-based firm is the world's largest producer of the metal, followed by Freeport.
The Institute for Supply Management's index of non- manufacturing businesses, which covers about 90 percent of the U.S. economy, dropped to 52.7 from 53.3 in June, the slowest pace in 17 months, the Tempe, Arizona-based group said yesterday.
Readings above 50 signal expansion, and the median projection in a Bloomberg News survey was for 53.5 in July. Companies hired fewer workers last month than in June, a report from ADP Employer Services showed yesterday.
"In the event that concerns over the U.S. economy strengthen, we could see more declines in copper prices," Ong Yi Ling, a metals analyst at Phillip Futures Pte. in Singapore, said by phone. Support for the three-month contract is at $9,400 a ton, she said. Support refers to price levels where buy orders may be clustered.
Nickel rose 0.2 percent to $23,840 per ton in London, and tin gained 1.2 percent to $26,610 per ton. Lead climbed 0.3 percent to $2,529 per ton, zinc advanced 0.6 percent to $2,392 and aluminum was little changed at $2,526.
Copper for October delivery fell 0.8 percent to 71,520 yuan ($11,112) per ton on the Shanghai Futures Exchange.