Prices also get a lift from rising supply tensions as strike looms at mine in Chile
Copper (HG-FT) climbed nearly 1 per cent on Wednesday as U.S. economic data bolstered the demand outlook for metals while a looming strike in Chile at one of the world's top copper mines also supported the price.
Copper for three-months delivery on the London Metal Exchange traded at $6,933 (U.S.) a tonne in morning trading from a close of $6,881 on Tuesday. The metal, used in construction, has hit a 14-month high above $7,100 a tonne in early December.
Union workers at Chile's massive Chuquicamata copper mine complex scrapped an early wage offer from owner Codelco on Tuesday, the union said, raising the spectre of a strike at the world's top copper producer.
Also lifting market sentiment in thin holiday trading was data on Tuesday showed U.S. existing home sales jumped in November at the fastest pace since February 2007. “Those U.S. home sales figures were a very encouraging sign for the market,” said John Meyer, an analyst at Fairfax.
He said the figures provided some prospects of improvement for the languishing U.S. construction sector.
“If you continue to drive construction demand, that will drive fundamental demand for commodities.”
The housing numbers helped offset downbeat U.S. GDP data.
Data due later in the session includes U.S. home sales data.
OECD demand lame
Chinese demand has helped copper, used in power and construction, more than double in value so far this year. But investors continue to fret about the poor state of industrial metals demand from OECD regions.
“The recent recovery in metals prices was driven primarily by domestic consumption and restocking in China,” Fitch Ratings said in a note.
“The construction, automotive, and capital goods sectors – key to consumption of base metals – remain weak in most industrialized regions.”
Underscoring demand concerns, copper stocks at LME warehouses have been rising since mid-July as Chinese demand cools off. They last climbed 1,875 tonnes to 482,775 tonnes, their highest since mid-April.
Meanwhile, the precarious nature of the copper concentrate market was underlined by reports that Freeport McMoRan had inked annual treatment charge deals with Japanese smelters 38 per cent down from 2009 levels.
Aluminum (AL-FT) traded at $2,261.75 a tonne from $2,242.
Prices may see support after Venezuela mandated power saving measures, forcing aluminum smelters and steel makers to cut output.
Zinc was at $2,468 from $2,434. Battery material lead was at $2,329 from $2,306 and tin was unchanged at $15,825. Nickel was at $18,131 from $17,750.
