Metals - Copper softens on profit-taking as tin hits 18-yr high
Tuesday, April 17, 2007 11:24:30 AM
http://www.afxpress.com
LONDON (Thomson Financial) - Copper prices softened as investors took profits
after last night's gains in Asia, and on hopes that supply disruptions caused
by industrial action at the world's second largest copper mine in Indonesia
will be less dramatic than expected. Rumours that demand from China, the
world's largest importer of the metal, is set to flag also held prices down,
analysts said. "Copper has been closing weak in London every evening, then
being bid up in Shanghai overnight. We're seeing the market selling into that
strength," noted John Kemp, an analyst at Sempra Metals. At 12.03 am, copper
for three-month delivery stood at 7,725 usd per tonne, against 7,730 usd at the
close yesterday
The metal has pushed higher in recent days on expectations of industrial
unrest at the Grasberg mine in Indonesia, operated by the US' Freeport-McMoran
Copper & Gold Inc. Investors fear the strike could further tighten supply of
the metal. Talks between Freeport-McMoran's Indonesian arm and workers at the
mine today failed to avert industrial action planned for tomorrow, heightening
already elevated supply fears. However, investors are hoping supply disruptions
from the rally will not be as dramatic as originally feared. Meanwhile,
analysts doubt the high levels of demand seen from China this year -- with
imports of the metal hitting record levels in March -- are sustainable at
current prices. "What China is prepared to buy at 5,000-6,000 usd is very
different from what it is prepared to buy at 8,000 usd," said David Thurtell,
an analyst at BNP Paribas. The market is now awaiting fresh direction before
pushing higher, analysts said. "Certainly the market is in a bullish
frame of mind, but it needs some positive news to give it momentum," said
Kemp. In the longer term, analysts still see base metals well supported, with
supply remaining tight across the complex and better-than-expected economic
data from the US helping shore up demand expectations. The Commonwealth Bank of
Australia said it has hiked its near-term forecast for copper, nickel and lead,
citing tightness of supply and saying the booming economy has led to an
unexpected durability in the buoyancy of metals prices
"We have always believed that the strong economic environment would support
metals prices at a very high level by historical standards, but have been wary
about how long the extraordinarily high prices for copper, nickel and lead in
particular could be sustained," the bank said. "However, the simple fact is
that metals prices have been at higher levels for longer than we anticipated,"
it added. The strength of the global economy should ensure demand continues to
hold up, the bank said, while supply remains tight among the base metals
Meanwhile, tin reached an 18-year high of 14,680 usd, before falling back to
trade at 14,600 usd, supported by strong fundamentals and continuing concerns
over supply from Indonesia, the world's largest exporter of the metal. "The
market is very tight and stocks have been declining since the beginning of the
year," noted analyst Perrine Faye of BaseMetals.com
Among other metals, nickel was at 46,700 usd, up from 46,200 usd, while zinc
was at 3,522 from 3,500. Aluminium dipped to 2,820 usd against 2,822 usd
yesterday, and lead fell to 1,985 usd from 2,005 usd
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