Copper gains on weaker dollar and despite industrial action in Chile

COMMODITIES REPORT:COPPER CLIMBED yesterday buoyed by a softer dollar and output disruptions in top world producer Chile.

Three-month copper on the London Metal Exchange finished up less than half a per cent at $9,135 a tonne from a close of $9,099 on Friday.

There was no trade on the Shanghai Futures Exchange due to a one-day holiday in China.

“The base are a bit mixed, slightly firmer on the back of the dollar, but there is still that underlying tone of potential implications for demand after poor data of late,” said analyst Daniel Major of RBS, “[but] prices haven’t sold off that heavily . . . so I think that’s quite encouraging.”

He added: “The currencies will continue to be important. I think the market is pricing a hike, but I don’t see it pushing people out of commodities into potentially better-yielding assets for the next few months at least.”

A weaker dollar makes commodities cheaper for holders of other currencies.

Falling ore grades, industrial disputes leading to production disruptions and a lack of big new mines are seen crimping mine supply in the medium term, providing a boost for copper prices.

Codelco’s El Teniente, Chile’s fourth-biggest mine, was working at less than half of capacity yesterday as most staff workers stayed off the job for a third day to avoid violence by striking contractors, the company said.

El Teniente, which produces about 2.5 per cent of the world’s mined copper, or 404,000 tonnes a year, continued to work with a skeleton staff to keep production at 40 per cent of capacity by processing stocked material.

Attention is turning to China’s copper import figures, which are due later this week and expected to show improvement. China is the world’s top consumer of base metals.

Zinc ended at $2,272 a tonne, after hitting its highest since end-April at $2,315 from $2,258 a tonne. It ran into chart-based resistance at the 200-day moving average.

Lead ended at $2,502 a tonne, a gain of nearly 3 per cent. Traders put the market’s performance down to volatility in thin trading, with the Chinese holiday draining volumes from the market.

Tin, used in electronic solder, finished at $26,005 from $26,400 a tonne. Nickel closed at $22,630 from $22,800 a tonne and aluminium ended at $2,660 from $2,637 a tonne. – (Reuters)