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Copper eyes $8,000/t on strike, lead hits high

LONDON - Lead hit a fresh all-time high and copper was up more than 1 percent on Monday as workers in Chile prepared to go on strike and as stocks fell.

‘There has been a good drawdown in inventories and obviously if Collahuasi goes on strike the market is looking for copper breaking down beneath the 100,000 level,’ analyst Nick Moore at ABN AMRO said, pointing to LME stocks falling to 102,075 tonnes.

London Metal Exchange copper was up $100 or 1.3 percent at $7,940/7,950 at 0926 GMT after earlier hitting a two-month high of $7,950.

‘Copper eyes the key target $8,000,’ an LME trader said.

Lead hit a new record at $2,945 in early trade and was indicated at $2,935/2,945 up from Friday’s $2,850/2,860.

‘CTAs (Commodity Trading Advisors) are still long (expecting prices to rise) in lead,’ the trader said.

Stock movements were encouraging a more bullish take on copper. LME stocks fell by 3,400 tonnes and at just over two days of global consumption they were at the lowest since last August, while Shanghai copper stocks fell by 7,526 tonnes to 83,091 last week.

Workers at one of Chile’s largest copper mines, privately-owned Collahuasi, were due to start an indefinite strike on Monday at 8 a.m.(1200 GMT) after failing to reach an agreement with management over pay and conditions.

The Chilean mine produces some 440,000 tonnes of copper per year, around 8 percent of Chile’s total.

‘The copper market lurches from one strike to the next ... there has been such acrimony between producers and their workers,’ ABN AMRO’s Moore said.

‘If ever there was a time when workers should receive better work conditions and better health care and pensions this is it.’

The copper price, doubling from the end of 2005 to hit a high of $8,800 last May, has strengthened producers’ balance sheets and shares in the sector have rocketed.

London Stock Exchange-listed Kazakhmys gained 1.4 percent and was among the 10 largest gainers.

JP Morgan said it forecast its broader basket of base, precious and bulk commodity prices to reach a level in 2010 more than double where it was when the bull run began in 2002.

‘This means that diversified mining companies should continue to generate strongly positive earnings,’ the report said.

Providing there are no major production stoppages, base metal supply will be less of a bullish influence on prices in the second half of 2007 and 2008, analyst David Thurtell at BNP Paribas said in a report.

The combination of some cooling in world demand and improving supply should push prices modestly lower in 2007-2008.

‘The market should record a 100,000-tonne surplus in 2007 and 200,000 tonne surplus in 2008, compared with deficits of around 200,000 tonnes in 2005 and 2006,’ Thurtell said, pointing to an average cash price at $6,725 in 2007 and $5,575 in 2008.

Lead hits fresh high

With the lead market still recovering from mine production losses, the industry is set to register a small shortfall of about 11,000 tonnes in 2007, JP Morgan said.

Canada’s Ivernia Inc., whose giant Magellan lead mine in Australia has been shut since April, said on Saturday it was seeking community comment on a proposal to ship lead concentrate from the port of Fremantle.

JP Morgan believed lead prices would peak in the next one to two months as the price has risen by over 75 percent this year.

Aluminium was at $2,830/2,834, up $17, zinc gained $51 or 1.5 percent to $3,476/3,486 and tin was at $14,250/14,300, up $100.