Metals - Copper leads base metals higher as supply fears add to strong demand

Metals - Copper leads base metals higher as supply fears add to strong demand

	Published : Mon, 16 Apr 2007 12:11 By : Agencies Print this Story

LONDON (Thomson Financial) - Copper rose in early trade, leading across-the-board gains in the base metals, as confirmation of strong demand from China, the world's biggest importer of the red metal, and supply fears from Indonesia and Argentina lifted prices.

Meanwhile both tin and lead remained near all-time highs as positive sentiment spilled over into the remainder of the base metals complex.

'The market is solidly higher this morning with the base metals responding to supply disruptions in the copper market as well as quite strong import numbers into China in the March month,' said Michael Jansen of JP Morgan in a note.

At 11.39 am, copper for three-month delivery stood at 7,900 usd per tonne, against 7,705 usd at the close on Friday.

Investor sentiment in the copper market has remained broadly positive, analysts said, with speculative longs rising in recent weeks, while speculative shorts have fallen steadily since peaking at the end of last year.

Demand remains strong, with customs data from China showing the Asian giant imported a record 219,359 tonnes of refined copper and copper alloy in March, while imports in the first quarter hit 541,103 tonnes, more than double the level seen a year earlier.

Prices have also been boosted by supply disruptions at the Grasberg copper and gold mine in Indonesia, operated by PT-Freeport Indonesia, a subsidiary of US mining giant Freeport-McMoran Copper & Gold Inc.

PT-Freeport Indonesia mined 545,000 tonnes of copper in 2006, the company said in its full-year report earlier this year.

Workers at the Grasberg complex, which contains the world's largest single copper reserve, have organised a 'rally' on Wednesday seeking a better deal on wages, which investors fear could disrupt output.

Meanwhile, UK miner Xstrata has declared force majeure over two shipments of copper from the Bajo de la Alumbrera mine in Argentina because of flood damage on a railway line to the port.

'Strong demand from China had already placed pressure on existing global copper supplies, but more recent delays have only stretched the tight availability of material,' noted analysts at Deutsche Bank.

Among other metals, aluminium rose to 2,852 usd from 2,812 usd at the close on Friday, while zinc edged up to 3,560 usd from 3,540 usd.

Nickel rose to 47,518 usd from 46,500 usd, while lead rose to 2,035 against 1,995 usd and tin reached 14,425 usd from 14,350 usd.

jan.harvey@thomson.com

har/bsd

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