Mining Profits...Investing In Industrial Metals

Copper prices fell at the London Metal Exchange on Friday as reported stocks rose further, fund managers said.

Three-months futures were quoted at $7,135/7,145 per tonne at 1120 GMT, down $175 or 2.4 percent from Thursday's kerb close.

"I'm not moving money out of copper, it's more to do with the fact that stocks are increasing. It's the only metal where they are," said a Geneva-based fund manager.

Stocks in warehouses that report their positions to the LME are a closely watched indicator of metal availability.

Copper stocks rose by 1,625 tonnes on Friday to 148,200, up 54 percent from the start of the year.

"Still, I'm not keen to go short of copper. I think it may be tight again," he said.

In a sign that copper smelters might continue to chase tight concentrate next year, Chile's Escondida has opened 2007 copper treatment and refining charge talks with Chinese smelters with an offer a third lower than charges for 2006.

The miner offered $60 per tonne for treating and 6 cents per pound for refining its concentrate in 2007, from $90 a tonne and 9 cents a pound, with price participation, in 2006.

DECOUPLING FROM COPPER?

Other metals were mostly unchanged, which analysts saw as a sign that copper's tradtional dominance of the market might be weakening.

"Copper continues to probe recent lows this morning but so far the other metals are not following suit," said UBS metals strategist Robin Bhar.

"Over the past few weeks evidence has been mounting that the other metals are not slavishly following copper and perhaps have managed to decouple from the red metal," he said.

Zinc , which has been serially recording new peaks as stocks fall, hit another new high of $4,580 in earlier trading before slipping to $4,450/4,480, down $80 from Thursday's close.

Aluminium was down $20 at $2,805/2,810 and nickel up $300 at $30,600/30,800.

The LME said on Friday that as of Monday it would lift the $300 per tonne per day nickel backwardation limit it imposed in August.