Copper ended with a one-percent gain on Tuesday, as a sharp drop-off in Chilean output in July and a prospective strike at a major Indonesian mine placed further strain on an already-tight supply/demand balance. The rallies bucked a wave of risk aversion in the broader market, where concerns over Greece's debt problems sparked renewed losses in the euro and crumbling consumer confidence in the United States capped earlier gains on Wall Street.
"The (copper) market has consistently been able to shrug off any bad news as of late," said Bill O'Neill, partner of LOGIC Advisors in Upper Saddle River, New Jersey. In New York, the benchmark US September copper contract traded on the COMEX exchange was up $4.0 at $4.1290 per lb. It had risen as high as $4.1435 in early business, its highest since August 5. Prices of the red metal shot up after a report showed production from Chile, which provides around a third of the world's copper, produced 373,498 tonnes in July, down 18 percent from the same month last year, and down more than 50,000 tonnes from June.
"When people talk about metals being affected by supply side constraints, what they really mean is copper. I would argue that is the main explanation of why the copper price has been so much stronger than the other metals, over not just the short term but over the last five years," analyst Stephen Briggs of BNP Paribas said.