October 26, 2011 / 9:38 AM / 9 years ago

METALS-Copper up on EU summit prospects, mine strike impact

* Freeport declares force majeure on Grasberg concentrates
    * Copper vulnerable to EU summit disappointment

    By Marie-Louise Gumuchian	
    LONDON, Oct 26 (Reuters) - Copper rose on Wednesday, ahead of a European
Union summit, but looked vulnerable if markets are disappointed by lack of
progress in tackling the euro zone debt crisis.	
    The metal used in power and construction was also bolstered by news that
Freeport McMoRan Copper & Gold declared force majeure on concentrate
sales agreements from its strike-hit Grasberg copper mine in Indonesia.
 	
    Three-month copper on the London Metal Exchange (LME) rose up to 3
percent on the day. It traded at $7,720 a tonne at 1241 GMT, just off a
one-month high of $7,820 hit the previous session. 	
    "There are very high hopes regarding the outcome of today's EU summit, that
is the main driver today, as it has been over the last three trading days,"
Commerzbank analyst Daniel Briesemann said.	
    He also cited comments by Chinese Premier Wen Jiabao who pledged that the
government would fine-tune economic policy and maintain appropriate credit
growth. 	
    The euro inched higher against the dollar ahead of the summit. 	
    Optimism that leaders could take major steps in solving the crisis was
tempered on Tuesday by news a meeting of European finance ministers had been
cancelled, even though the summit will still go ahead.	
    "Today was set to be an all important decision day on EU debt, but we are
now less sure that EU policy markers are ready to lay out a comprehensive plan,
so the market may have to wait a while longer," Basemetals.com said in a note. 	
   "Overall, we remain medium-term bearish as the size of the debt issues are
unlikely to go away regardless of what policy makers decide. If they manage to
contain the situation that will be a result, but if they are to come up with a
plan to get to the root of the problem then that is likely to mean further
economic hardship."	
   In the United States, data showed demand for a range of long-lasting
manufactured goods rose more than expected in September to post the largest
increase in six months, cementing views of a step-up in economic growth in the
third quarter, even though new orders for transportation equipment fell.
 	
    	
    FORCE MAJEURE	
    In Indonesia, production at Grasberg has been severely hit by a month-long
strike action over pay and conditions, road blockades and possible pipeline
sabotage. 	
    Freeport's force majeure decision frees it from some of its contractual
obligations to supply buyers of metal produced at the world's second-largest
copper mine. 	
    "This comes at a time when people are starting to feel more confident about
the outlook for copper and about a pickup on the demand side," MineLife analyst
Gavin Wendt said. 	
    Underpinning copper in the face of economic headwinds was data on LME
stocks, seen as an indicator of demand. The latest figures showed warehouse
stocks fell 1,725 tonnes to total 437,425 tonnes, the lowest since March. 
    Dwindling LME copper stockpiles in Korea and Singapore, indicating steady
import demand in top consumer China, supported prices. 
    Chinese fabricators are buying more spot refined copper because of reduced
supply of alternative feed scrap and to rebuild stocks given low prices, traders
said on Tuesday. 	
    Among other metals, zinc , used in galvanizing, traded at $1,865.75 
from $1,842 a tonne, while soldering metal tin was at $21,900 from
$22,250 a tonne.	
    Belgium's Nyrstar , the world's biggest zinc producer, lowered its
guidance on Wednesday for the zinc it will mine this year, given setbacks at its
Tennessee mines and a production downgrade of its Finnish partner Talvivaara
 . 	
    Battery material lead traded little changed at $1,965.50 from $1,961
a tonne, aluminium traded at $2,221.75 from $2,224 a tonne while nickel
 traded at $19,700 from $19,750 a tonne. 	
    	
 Metal Prices at 1243 GMT
 Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T
  Metal            Last      Change  Pct Move   End 2010   Ytd Pct
                                                              move
  COMEX Cu       349.15        7.25     +2.12     444.70    -21.49
  LME Alum      2220.75       -3.25     -0.15    2470.00    -10.09
  LME Cu        7720.50      195.50     +2.60    9600.00    -19.58
  LME Lead      1962.25        1.25     +0.06    2550.00    -23.05
  LME Nickel   19662.00      -88.00     -0.45   24750.00    -20.56
  LME Tin      21850.00     -400.00     -1.80   26900.00    -18.77
  LME Zinc      1866.00       24.00     +1.30    2454.00    -23.96
  SHFE Alu     16380.00      -10.00     -0.06   16840.00     -2.73
  SHFE Cu*     57230.00      520.00     +0.92   71850.00    -20.35
  SHFE Zin     14945.00      -90.00     -0.60   19475.00    -23.26
 ** Benchmark month for COMEX copper
 * 3rd contract month for SHFE AL, CU and ZN
 SHFE ZN began trading on 26/3/07
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