Copper

[Tackler]

Copper drifts after topping $8,000 on Chile strike
Mon Aug 7, 2006 1:15 PM GMT By Daniel Magnowski

LONDON (Reuters) - Copper futures backed off from
highs above $8,000 a tonne on Monday after early rounds of
buying ran out of steam, but the metal was well supported by
concerns over the possibility of a strike at Escondida in Chile.
More than 2,000 union workers are prepared for a
high-profile strike at BHP Billiton-owned Escondida, the world's
largest copper mine, starting on Monday after talks for a new
wage contract failed despite 11th-hour government mediation.
Copper for delivery in three months on the London Metal
Exchange <MCU3=LX touched $8,030 in early trade, up $170 from
Friday's closing price, but by 1002 GMT had slipped to
$7,835/7,855.
While Escondida is dominating the market, fund managers who
were drawn to copper futures say tight supply and strong demand
are the long-term driving factors.
"We will be buying it no matter what," a European fund
manager with over $100 million in assets said.
"The performance of base metals has been huge, and we'll be
increasing our base metals exposure again today."
At $8,000 per tonne, copper is almost $1,000 below the
all-time high it hit in May, but more than four times more
expensive than it was three years ago.
Lack of new supply and dwindling stocks meant there was very
little excess metal in the system, which would support prices,
investment bank UBS said.
"We still see industrial metal prices peaking next year and
favour copper, platinum and zinc," strategist John Reade said in
a note.
Dollar-denominated copper, other base metals and gold were
supported by a fall in the dollar on growing expectations that
the U.S. Federal Reserve would hold benchmark interest rates
steady at 5.25 percent this week after a weak U.S. jobs report.
Aluminium traded up to $2,550 per tonne, $11 higher than
Friday's close, and gold reached $651 per ounce, up $7 from
Friday's late quote in New York.
Mining stocks fell in early trade in London as stock markets
were dragged down by high oil prices. London Brent crude jumped
2 percent to more than $77 per barrel as producer BP began
shutting an oil field in Alaska.