AFP: Copper prices rise, but outlook remains bearish
Shanghai and London copper prices rose by at least one per cent as traders hunted bargains following gains in oil prices and a fall in the US dollar.
The key Shanghai copper futures contract rose 1.3 per cent to 22,680 yuan ($US3,314) a tonne by 0246 GMT (1346 AEDT), having hit a five-year low of 22,210 yuan on Friday, while the London Metal Exchange copper for three month delivery up 1.7 per cent to $US2,893.
However, traders and analysts said the red metal, used in construction and power facilities and down about 60 per cent in Shanghai this year, is expected to remain weak next year due to the impact of the global financial crisis.
"Copper prices rose in London this morning as traders entered the market with expectation that prices should have support under $US2,800 level, and partly cheered by a rising oil price," said a LME dealer in Shanghai.
"But I do not think the momentum could last long. In a bigger picture, we are still in the middle of the recession that would definitely hurt metal demand," he said.
Oil rose more than $US2 to above $US39 a barrel in reaction to the violence between Israel and Hamas on fears of supply disruptions.
A weaker US dollar could also support base metals, with the euro rising to $US1.4146 on expectations the US economic slowdown will continue into 2009.
Analysts remain bearish on copper even though prices have more than halved this year in volatile trade.
"We feel copper producers will not cut their output by a large size for the next year as they can still have profits, which could worsen the situation with sluggish demand," said analyst Cai Louyi who heads the research unit of state-owned brokerage China International Futures.
The global financial crisis has hit many big players in the metals and mineral sector. The Australian newspaper said on Monday Oz Minerals , the world's second-largest zinc miner, faces a battle to convince one of its lenders, HBOS, to give it more time to refinance $US560 million in bank debt.
On the supply side, Cuban unrefined nickel and cobalt production is expected to total 70,400 tonnes this year, state-run radio reported on Saturday. The number is down from an estimated 76,000 tonnes in 2007.
