Isra-Mart srl: Copper up, but demand jitters cap gains

www.isramart.com
Copper prices rose on Wednesday as looming labour
disputes at mines threatened supplies and the dollar slipped, but nervousness
about demand from top consumers China and the United States curbed gains.
Benchmark copper on the London Metal Exchange was trading at $9,012
a tonne at 0918 GMT from $8,933 a tonne at the close on Tuesday. The metal used
widely in the power and construction industries has so far on Wednesday traded
in a $9,043 and $8,968 a tonne range.
"Copper is supported by the strikes in Indonesia and Peru, but that
underlines the fundamentals for the future," said Andrey Kryuchenkov, analyst at
VTB Capital.
"More immediately there is a lot of concern about global demand,
particularly from China ... We need to see significant draws in LME
inventories."
China accounts for nearly 40 percent of global copper demand estimated this
year at around 19 million tonnes. The United States accounts for about 10
percent of global consumption.
A lower U.S. currency makes commodities priced in dollars cheaper for
holders of other currencies.
Freeport McMoRan Copper & Gold's Indonesia mine workers are set to
strike from Sept. 15 to Oct. 15 unless the firm meets their demands for a pay
rise, a union official told Reuters on Tuesday.
Workers at Peru's third-biggest copper mine, Cerro Verde, are due to launch
a 48-hour strike on Wednesday for higher pay.


FEW SIGNS OF PICK-UP
Stocks of copper in LME approved warehouses stand at 465,250 tonnes, little
changed in recent months. Cancelled warrants -- material earmarked for delivery
-- at a mere 1.26 percent of total stocks also show few signs of a pick up in
demand.
"Copper inventories rose in the early part of the year, till about May,
since then there hasn't been much change. I think prices are still too high for
the Chinese," a copper trader said. "They are waiting to see what happens."
Eyes are also on the LME options market where there are a large number of
outstanding contracts to buy (calls) and sell (puts) copper at $9,000 a tonne.
An election to exercise options needs to be made Wednesday morning.
"There isn't much difference between the number of puts and calls, it's
probably an indication of how much uncertainty there is," the trader said.
Alongside equities and bonds, metal markets are watching the euro zone debt
crisis and looking for clues to the health of the U.S. economy, the world's
largest, and growth prospects in China.
"Uncertainty is likely to remain high and the slowdown in the economy may
drag on for an extended period," Credit Suisse Private Banking said in a note.
Three-month aluminium was trading at $2,383 a tonne from $2,380 a
tonne on Tuesday, zinc at $2,204 from $2,190, lead at $2,411
from $2,388.
Tin was trading at $24,000 from $23,875 and nickel at
$21,125 a tonne from $20,675.