Copper nudges up, set for weekly gain on China supply tightness

By Reuters News
Workers of Bolivia's Corocoro copper mines prepare copper sheets after the sale of 1,020 tonnes of copper cathodes with a purity of 99.99 percent and a value of $60 million to the consortium Cormin Peru, in Coro Coro some 85 km southwest of La Paz, Octobe

By Solomon Cefai

SINGAPORE, Sept 25 (Reuters) - Copper prices ticked up on Friday and were on track to end the week higher, capping a choppy week in which supply tightness in top consumer China supported prices before a stronger dollar and inflation concerns eroded some of those gains.

Benchmark three-month copper on the London Metal Exchange was up 0.06% at $14,630 a metric ton, as of 0700 GMT, a 0.75% increase from last week's close.

"Visible inventories in China have dropped off quite a lot, while smelters have been announcing reduced production schedules for maintenance... the Chinese market is clearly quite tight," said David Wilson, head of metals strategy at BNP Paribas.

Copper inventories in warehouses monitored by the Shanghai Futures Exchange fell 15.9% from last Friday to 47,147 tons, the exchange's weekly stock report showed on Thursday.

Adding to supply concerns, operations at BHP's BHP.AX Escondida mine in Chile, the world's largest copper mine, were suspended on Wednesday after a worker was killed in an accident.

The LME cash-to-three-month copper spread was at a backwardation of $124.75 a ton on Thursday, spiking from $68.93 a ton a day earlier, suggesting heightened concerns about copper availability.

Elsewhere, zinc increased 0.61% and was set to end the week 1.51% higher, supported by supply fears after smelter Nyrstar said it was launching a strategic review of its Dutch zinc smelting operations.

Zinc tightness has eased since last month's price rally. "But the easing trend has suddenly reversed, partly on that announcement, prompting spreads to tighten again," Wilson said.

The LME cash-to-three month zinc spread was in a $106-a-ton backwardation on Thursday, compared with $65.35 a day earlier, suggesting tightening physical availability.

Among other LME metals, aluminium gained 0.55%, lead dipped 0.28%, nickel slipped 0.19% and tin was up 0.04%.

The Shanghai Futures Exchange was closed on Friday for a holiday.

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