copper price increasing from lows

Copperco was a great entry price today into the copper sector as cuo hits year lows and great buying for the rebound.

Copper rebounds on LME as US dollar weakens
Michael Taylor | November 14, 2008
Article from: Reuters
COPPER recovered from an earlier three-year low, as a weaker US dollar and Chinese production cuts offset demand concerns after data showed China's industrial output fell in October.

Three-month copper on the London Metal Exchange dropped as low as $US3520 a tonne, its weakest since September 2005. However it pared losses to close up $US9 at $US3630 a tonne as the US dollar lost ground against the euro.

In early New York trading, the euro rose 0.5 per cent against the dollar to $US1.2501, clawing back from the two-week low of $US1.2389 hit earlier in the global session.

"The weak dollar is definitely the thing," said Justin Lennon, a copper analyst at Mitsui Bussan Commodities in New York. "(But) the outlook for the next six months is not good."

"The Chinese output ... was weaker. Maybe that's giving a little bit of a push," Lennon added.

China's industry output growth waned to its weakest level in seven years, data showed yesterday, reinforcing evidence the financial crisis is plunging the world into a painful downturn.

Analysts doubt the drop in China's production of copper and other metals will lead to tighter supply at a time when demand for raw materials is weakening.

China said its output of the industrial metal dropped 8 per cent on the year to an eight-month low in October as manufacturers cut production in response to weakening demand.

"That's not a surprise," said Judy Zhu, analyst at Standard Chartered Bank in Shanghai. "We've heard production cuts by smelters lately and I don't think it's going to create tight supply in the international market because the smelters are just trying to keep their inventory in check."

China's production of refined copper fell to 293,900 tonnes in October, according to the National Bureau of Statistics.

Aluminium output dropped 0.9 per cent and nickel fell 18 per cent but zinc output rose 3.6 per cent.
Despite the cuts by producers, mostly Chinese smelters, stocks of copper in LME warehouses rose another 2525 tonnes to 272,625 tonnes, their highest since March 2004.

LME aluminium tracked copper higher, rising $US3 to close at $US1928 a tonne. The large jump in inventories had earlier pushed prices down 1.1 per cent to a low of $US1903 a tonne, the weakest level since October 2005.

LME aluminium stocks surged 44,425 tonnes, the biggest one-day rise since October 14, to 1.56 million tonnes, enough for 15 days of global consumption and the highest on record for the contract.

"Rising stockpiles across much of the base metals complex has impacted negatively on sentiment, while technical factors and the FX (foreign exchange) markets continue to dictate short-term price direction," said Standard Bank in a note.

Volatile nickel slipped to a low of $US10,330 a tonne versus $US10,500 but then jumped as high as $US11,600 as producers cut output to combat weaker demand. The metal closed at $US11,450.

BHP Billiton said yesterday that it had scrapped a study on developing an integrated nickel project in eastern Indonesia, while Xstrata announced plans to cease operations at Craig and Thayer-Lindsley nickel mines ahead of schedule.

Lead jumped to $US1359.75 a tonne from $US1300 and was last bid at $US1338, while tin was last bid at $US13,700 versus $US13,700 yesterday.

Zinc climbed 5.7 per cent to a one-week high of $US1215 versus $US1150 before closing at $US1210.

However, analysts offered base metals a glimmer of hope, saying both zinc and lead prices, which have both been boosted by short-covering in recent days, could be close to a bottom.

Reuters