copper edges higher

LONDON (Thomson Financial) - Copper edged higher in midafternoon trade, supported by fears further strike action in South America could disrupt supply, with dollar weakness and improving investor sentiment underpinning gains across the base metals complex.

Fears of economic weakness in the US, where data showed yesterday that housing sales declined once more in August, is capping gains, however. Housing is a major consumer of copper, which is used in pipes and wiring.

'Copper's momentum remains impressive and the market looks to be comfortable above the magic 8,000 number, and in the short term is targeting 8,300 (usd a tonne),' said analysts at RBC Capital Markets.

'The ever weakening value of the dollar continues to support, as does the upcoming strike at Southern (Copper in) Peru,' they added.

At 2.38 pm, LME copper for 3-month delivery was trading at 8,040 usd a tonne against 8,000 usd at the close yesterday.

Prices are taking support from upcoming industrial action at Southern Copper (nyse: PCU - news - people ) Corp's operations in Peru, where workers at its Cuajone mine and Ilo smelter are due to strike for higher pay from Oct 2.

The company has been plagued by strike problems this year. Its parent company Grupo Mexico said it is planning to close its Taxco silver and lead mine because of labour problems and falling reserves.

And miners at its Cananea copper mine, the largest in Mexico, have been on strike since the end of July.

Lead meanwhile also gained, closing in on its all-time high, on news that shipments from the Esperence port in Western Australia may face further delays. The metal was trading at 3,460 usd against 3,406 usd.

'Prices are likely to find support from news today that the clean-up of lead contamination at the Australian port of Esperance has not been successful,' said analysts at Barclays (nyse: BCS - news - people ) Capital.

'This could mean the resumption of shipments through the port from Ivernia's Magellan mine may take longer than expected.'

The Magellan mine is the source of around 3 pct of global supply of the heavy metal.

Nickel, yesterday's biggest faller, was also stronger at 32,900 usd a tonne against 32,550 usd.

'Higher stainless (steel) production is expected in Q4 ... which should mean demand for nickel picks up, which could feed through into higher prices especially as the alloy-surcharge mechanism in Europe and the US exacerbates the restocking cycle,' said UBS (nyse: UBS - news - people ) analyst Robin Bhar.

'On the flip side though, nickel supply looks plentiful both from primary and secondary (scrap) sources, an obvious response to still elevated nickel prices.'

'We believe that nickel prices are likely to be capped above 35,000 usd a tonne and a move back towards 25,000 usd a tonne appears likely,' he added.

Among other metals, aluminium climbed to 2,500 usd from 2,456 usd, while zinc firmed to 3,000 usd from 2,925.

Tin was steady at 15,300 usd against 15,310 usd.

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