Copper nudges up, set for weekly gain on China tightness

By Reuters News

By Solomon Cefai

SINGAPORE, Sept 25 (Reuters) - Copper prices nudged up on Friday and were set to end the week higher, capping a volatile week in which tightness in big consumer China pushed up prices before a stronger dollar and inflation concerns pared back some of those gains.

Benchmark three-month copper on the London Metal Exchange was up 0.08% at $14,632 a metric ton by 0300 GMT. That marks an increase of 0.76% on 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," David Wilson, head of metals strategy at BNP Paribas, said.

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 0.59% and was set to end the week 1.49% higher, supported by supply fears intensified by smelter Nyrstar's announcement that 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, from $65.35 a day earlier, suggesting tightening physical availability.

Among LME metals, aluminium added 0.43%, lead dipped 0.08%, nickel lost 0.43% and tin was little changed, down only 0.04%.

The Shanghai Futures Exchange (SHFE) was closed on Friday for national holidays in China.

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