re: copper, page-2

copper and basemetals NEWS FOCUS-Copper takes beating on LME, falls under $7,000 level

BaseMetals.com - Martin Hayes

Copper fell under the $7,000 a tonne level on the LME on Friday, the first time the market has been under this point since since mid-summer, as CTA and systems-based sales resulted in prices finally breaking out of the $7,000/8,000 range.

Sell-stops were subsequently triggered just under $7,000, driving the market down even further to $6,915 a tonne, down $395, or 5.4 percent from Thursday, the lowest now since June.

On the charts, there has now been a conclusive break-out of a pennant formation, and the decline, if confirmed, points to further losses. The next key target on the downside is the $6,400/6,500 mid-June lows.

Fundamentally, Friday's losses were sparked by warehouse stock increases in China and on the LME, where stocks rose 1,625 tonnes to 148,200 tonnes, a fresh high since May 2004.

Since early-October, 38,650 tonnes of copper have flowed into LME warehouses, an increase of 35 percent, swinging the market decisively into contango. On Friday, the cash/threes spread was $15/20 contango, against May's $175 backwardation.

Also undermining sentiment has been the early start to labour talks at Codelco's Chuquicamata facilities, which lessened concern ahead of the end-year contract expiry.

Codelco, the world's biggest copper producer, started negotiations with the top union at its largest copper mine in Chile. The second- and third-largest unions at Chuquicamata are not in discussions. They are set to start negotiations on November 17,

The possibility of supply-side stoppages at the 855,000-tonne a year facilities has been the sole prop for prices after a string of deals at other copper producers.