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Copper rises on LME, tightness

continues to bubble

LONDON: Copper prices were supported by continued technical tightness on the LME on Tuesday, with stocks falling to close to 300,000 tonnes and the cash/threes backwardation widening out once more, traders said.

The market was also cautious over ongoing labour talks at Chile's Chuiquicamata mine, where Codelco is putting its final offer to the unions later today.

Other metals dutifully followed copper, with tin above $6,600 at a 6-1/2 month high, aluminium wary of upcoming North American labour contract talks, and nickel for the moment shrugging off expected stock increases.

Copper finished the kerb session at $2,610 a tonne, a $12 gain from Monday. The cash/threes backwardation was at $80/85, against $70/75 on Monday and single figures two weeks ago.

In the short and medium term analysts expect copper prices to remain high, as the market has stubbornly refused to move lower this year. The much-vaunted new supply that is coming on stream later this year may well be discounted in prices, as it has already been hedged, one said.

Angus McMillan of LME trader Billiton Metals noted that prices may stay firm until this new mined production is warranted and actually starts to show up in warehouses.

Tin prices, which have consolidated nicely after last week's sharp gains, moved higher again today, breaking above the $6,600 level to hit a 6-1/2 month high of $6,650.

The stock fall was a modest 50 tonnes, but underlined the technical tightness in the market centred around June delivery dates. Last kerb trade was at $6,640, up $95.

In aluminium, the market focused on late Monday news Alcan Kitimat unions were geared up to strike, after having their mandate confirmed, in support of July's labour contract expiry. Also, the stock increase of 6,425 tonnes was less than expected. Prices were $13 higher at $1,609.

Nickel was $70 higher at $8,200, but the market may well be inhibited by stock increases in coming weeks. There is talk that banks holding Russian nickel from AIOC are having it cut into deliverable shape, MacMillan noted.

Cutters in Rotterdam are booked for weeks ahead, which suggests a considerable tonnage may be warranted.

Lead edged quietly higher, ending the kerb at $815, up $5, while zinc was quoted at $1,066/67, against $1,059 last on Monday.

Alloy was little changed at $1,365/1,375.-Reuter