Industrial Metals Price Watch: Copper Gains on Strong China Data

on Jun 4, 2013

The copper price climbed on Tuesday, June 4, supported by signs of improvement in China’s manufacturing activity and the shutdown of the world’s second biggest copper mine.

Copper for three-month delivery advanced by 0.6 percent to $7,380.25 a metric ton as at 11:43 a.m. in Seoul (3.43 GMT). Yesterday, prices touched $7,397.75, the highest level since May 23. The metal has benefitted from the release of the official manufacturing index for China on Saturday, which showed signs of stabilising growth in the country. China is the world’s biggest consumer of copper.

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On the Shanghai Futures Exchange copper futures for September delivery advanced to 53,090 yuan ($8667) per ton on Tuesday.
**Grasberg Mine Shutdown**
Another factor contributing to the rise in the copper price on Tuesday was the suspension of Freeport-McMoRan Copper & Gold Inc.’s (NYSE:FCX) production in Indonesia for an investigation by the Indonesian government of accidents at the company’s Grasberg mine. Twenty-eight people were killed in the mine on May 14, as one of its tunnels collapsed. Another accident on June 1 took the life of one more worker. The investigation may take up to three months to be completed.

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Other factors supporting a further rise in the copper price include the lack of production at Bingham Canyon in Utah and reduced output at Collahuasi in Chile. Combined with the shutdown at Grasberg, which is the world’s second biggest copper mine, this is expected to lead to reduction of supplies in a period that is traditionally strong for demand, according to Goldman Sachs Group Inc (NYSE:GS). The group expects that the price will rise to $8,000 in six months.

“We remain bullish copper,” said Will Yun, a commodities analyst at Hyundai Futures Corp., as quoted by Bloomberg. “We’ve recently had some signs of improvement that can support demand. Still, there are many others who are sceptical about China’s recovery.”
Most of the other base metals including zinc and aluminum declined on the London Metal Exchange on Tuesday.


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