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6 months ago
METALS-London copper edges lower but supply risks still support
February 9, 2017 / 4:46 AM / 6 months ago

METALS-London copper edges lower but supply risks still support

* Goldman Sachs sees supply issues underpinning bullish copper mkt

* Markets looking to China trade data on Friday

* Coming up: U.S. wholesale inventories for Dec at 1500 GMT (Adds comment, detail; updates prices)

By Melanie Burton

MELBOURNE, Feb 9 (Reuters) - London copper edged off its highest since early February on Thursday though it still remained supported by supply risks that threaten to erode an expected modest surplus this year.

The potential for supply disruptions has become an increasing focus in copper markets in the past month, Goldman Sachs said in a report, with workers at the world's largest mine in Chile set to strike and with Freeport-McMoRan Inc's Grasberg mine in Indonesia yet to be granted a new export permit.

"Downside risks to supply appear increasingly likely to materialise and translate into copper production losses ... these supply-side dynamics appear increasingly likely to support our tactically bullish 1H17 copper view," said Goldman.

Three-month copper on the London Metal Exchange had slipped 0.3 percent to $5,876.50 a tonne by 0702 GMT. That followed a 1.7 percent gain in the previous session when prices climbed to $5,925. Copper rose to $6,007 on Feb. 1, the most since Nov. 28.

Shanghai Futures Exchange copper advanced 0.5 percent to 47,410 yuan ($6,900) a tonne.

BHP Billiton Plc has begun halting operations at its Escondida copper mine in northern Chile, ahead of a planned strike on Thursday, a union leader told Reuters.

Freeport warned it would scale back activities at its Grasberg copper mine, said an official at Indonesia's main copper smelter, PT Smelting, amid a worker strike and other issues.

Also adding to supply kinks in copper, protests over public work projects in a remote highland region of Peru have blocked roads used by MMG Ltd to transport copper concentrates from its Las Bambas mine, a representative of the ombudsman's office said on Wednesday.

Traders are also looking ahead to Chinese trade data on Friday for signals of the strength of the world's No.2 economy and for numbers on copper imports. Shipments are typically weaker between Christmas and the Lunar New Year.

In news, Japan's core machinery orders rebounded more than expected in December from the prior month's fall and are seen rising again this quarter - an encouraging sign of a pick-up in capital expenditure.

Philippine environment minister Regina Lopez said on Thursday her order to shut mines operating in watersheds is non-negotiable and has the backing of President Rodrigo Duterte, who has the final say on the fate of the affected mines.

PRICES

Three month LME copper

Most active ShFE copper

Three month LME aluminium

Most active ShFE aluminium

Three month LME zinc

Most active ShFE zinc

Three month LME lead

Most active ShFE lead

Three month LME nickel

Most active ShFE nickel

Three month LME tin

Most active ShFE tin ($1 = 6.8706 Chinese yuan renminbi) (Reporting by Melanie Burton; Editing by Joseph Radford and Christian Schmollinger)

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