Copper climbs towards $8,000, at five-week high
Last Updated(Beijing Time):2006-07-12 14:34
London Metal Exchange copper extended gains to hover just below $8,000 a tonne on Wednesday, supported by strong fundamentals and steep gains to an all-time high in nickel prices the previous day.
By 0424 GMT, LME copper for delivery in three months <MCU3> was up $50 at $7,950 a tonne. The red metal had earlier traded as high as $7,985, the highest since June 5.
"We expect copper prices to test the $8,000 level later today," said an LME dealer in Tokyo, adding that copper was supported by firmer sentiment in the commodities market with gold trading below a five-week high.
On Tuesday, copper closed up $170 or 2.2 percent at $7,900, while nickel <MNI3> touched a record peak of $25,700 before ending up $1,000 at $25,650 on dwindling stocks and strong demand from stainless steel mills, especially from China.
"Sometimes, a high nickel price hurts demand, but at this moment there is no indication on lower purchases as the inventory is still decreasing," said Peter Richardson, chief metals economist at Deutsche Bank.
Nickel stocks in LME warehouses fell another 486 tonnes on Tuesday to 8,418 tonnes, the lowest since August 2005, with the premium for cash nickel over the three-months price widening to $1,900. On May 11, the premium was $475.
On the supply side, the union at Chile's Escondida, the world's biggest copper mine, said on Tuesday there had been no progress in talks with the company to negotiate a new contract to replace one that expires in early August.
Mine workers are labouring at a slower-than-usual pace in hopes of spurring along the talks, a union representative told Reuters, but BHP Billiton, which controls the mine, said production has not been affected. [ID:nN11177167]
The most active copper contract in Shanghai, September, <0#SCF:> ended the morning session up 1,540 yuan at 72,980 yuan ($9,133) a tonne, supported by gains in LME copper.
"Traders have been arbitraging as they believed Chinese prices would chase LME prices in near futures," said Yang Jun, an analyst at Dalian Northern Futures.
Shanghai spot copper prices were between 65,200 and 65,600 yuan, up 475 yuan from the previous day.
