LONDON: Copper prices rose on Wednesday as labour disputes at mines threatened supplies and the dollar slipped, but nervousness about demand from top consumers China and the United States curbed gains.
Benchmark copper on the London Metal Exchange was trading at $8,980 a tonne at 1039 GMT from $8,933 a tonne at the close on Tuesday. The metal used widely in the power and construction industries has so far on Wednesday traded in a $9,043 and $8,968.75 a tonne range.
"Copper is supported by the strikes in Indonesia and Peru, but that underlines the fundamentals for the future," said Andrey Kryuchenkov, analyst at VTB Capital.
"More immediately there is a lot of concern about global demand, particularly from China ... We need to see significant draws in LME inventories."
China accounts for nearly 40 percent of global copper demand estimated this year at around 19 million tonnes. The United States accounts for about 10 percent of global consumption.
A lower US currency makes commodities priced in dollars cheaper for holders of other currencies.
Freeport McMoRan Copper & Gold's Indonesia mine workers are set to strike from Sept. 15 to Oct. 15 unless the firm meets their demands for a pay rise, a union official told Reuters on Tuesday.
Workers at Peru's third-biggest copper mine, Cerro Verde, are due to launch a 48-hour strike on Wednesday for higher pay.
FEW SIGNS OF PICK-UP
Stocks of copper in LME approved warehouses stand at 465,250 tonnes, little changed in recent months. Cancelled warrants -- material earmarked for delivery -- at a mere 1.26 percent of total stocks also show few signs of a pick up in demand.
"Copper inventories rose in the early part of the year, till about May, since then there hasn't been much change. I think prices are still too high for the Chinese," a copper trader said. "They are waiting to see what happens."
Traders reported high activity in the LME options market where a large number of outstanding contracts to buy (calls) and sell (puts) copper at $9,000 a tonne were exercised.
"There were lots of puts and calls, lots of interest on both sides and so it didn't have any impact on three-month copper," another trader said.
Alongside equities and bonds, metal markets are watching the euro zone debt crisis and looking for clues to the health of the US economy, the world's largest, and growth prospects in China.
"Uncertainty is likely to remain high and the slowdown in the economy may drag on for an extended period," Credit Suisse Private Banking said in a note.
Three-month aluminium was trading at $2,376 a tonne from $2,380 a tonne on Tuesday, zinc at $2,205 from $2,190, lead at $2,402 from $2,388.
Tin was trading at $24,000 from $23,875 and nickel at $21,099 a tonne from $20,675.
Copyright Reuters, 2011
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