Bloomberg News

Copper Rebounds in London as U.S. Economic Outlook Hurts Dollar

June 09, 2011

June 9 (Bloomberg) -- Copper in London rebounded as concern about the U.S. economy hurt the dollar amid expectations supplies will lag behind demand this year.

Three-month copper on the London Metal Exchange rose as much as 0.6 percent to $9,088.75 a metric ton before trading at $9,060.25 at 10:42 a.m. in Singapore. Aluminum and nickel also joined a rally in other commodities including oil.

“Although no one’s really looking at the fundamentals now, we see that deficit outlook supporting prices in the background as many people are still expecting a revival in demand,” Yu Mengguo, head of research at Jinpeng International Futures Co., said from Beijing. “Day-to-day moves will be dictated by the currency and other markets.”

July-delivery copper on the Comex in New York was little changed at $4.1045 a pound, while August-delivery metal climbed for the first day in three on the Shanghai Futures Exchange, gaining as much as 0.6 percent to 67,930 yuan ($10,485) a ton.

Codelco, the world’s largest copper producer, boosted output at its El Teniente mine in Chile to about 60 to 70 percent of normal capacity after sending in extra workers, according to a company official yesterday. The copper mine had been operating at about 40 percent capacity after employees stayed at home to avoid clashes with striking contract workers.

The output disruptions may hinder Codelco’s aim to increase production among its six mines this year and potentially worsen a shortfall this year, forecast to be 377,000 tons by the International Copper Study Group.

‘Upside Risk’

“Reports suggest that negotiations are progressing,” Credit Suisse Group AG analyst Stefan Graber, wrote in a note today. “However, copper-mine supply remains an upside risk factor as global expansion is struggling to keep pace with demand and ore grades at major existing mines are falling.”

The dollar fell against a six-currency basket including the euro and yen ahead of a report that economists said will show the U.S. trade deficit widened to the most in 10 months, adding to signs that the Federal Reserve will keep borrowing costs low, while European Central Bank President Jean-Claude Trichet may today signal policy makers are likely to raise interest rates next month.

Aluminum in London rose 0.3 percent to $2,676 a ton and nickel gained 0.2 percent to $22,750 a ton. Zinc fell 0.7 percent to $2,276 a ton and lead dropped 0.5 percent $2,565 a ton. Tin was little changed at $25,700 a ton.

--Editors: Jarrett Banks, Thomas Kutty Abraham

To contact the reporter for this story: Glenys Sim in Singapore at gsim4@bloomberg.net

To contact the editor responsible for this story: James Poole at jpoole4@Bloomberg.net


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