Copper stays low despite tight supply

LONDON: Supply problems failed to lift copper out of ranges on Thursday as investors remained sidelined before a statement on US interest rate policy, dealers said. But Friday might see an explosion of buying as fund managers tried to drive prices higher to improve the performance of their portfolios for the end of the first half.

“Volumes are probably the lowest in about four months. People just don’t want to get involved before the Fed,” a dealer on the London Metal Exchange (LME) floor said, referring to a US Federal Reserve interest rate statement due later.

At midday LME copper for delivery in three months was at $6,990 a tonne, up $90 from the previous close. The Federal Reserve was widely expected to lift its benchmark rate for a 17th straight time, to 5.25% from 5%, while some in the market predicted a rise of 50 basis points. Dealers said the statement after the Fed meeting would be more important than the interest rate figure.

Dealers said strikes at two of Grupo Mexico’s copper facilities and demands for a pay rise of up to 10% and improved health benefits at BHP Billiton’s Escondida mine in Chile underpinned copper.

Aluminium was up $31 at $2,516 while zinc was $105 higher at $2,960. Nickel was up $650 at $21,050/21,055. Nickel stocks are down 60% from the start of the year to just above 10,000 tonnes, equivalent to around three days of world consumption. LME copper stocks at 93,925 tonnes are less than two days of world consumption.