Monday, February 12, 2007

Copper edged lower as traders focused on yet another rise LME inventories, overlooking data out earlier showing Chinese imports of unwrought copper and semi-finished copper products rose 44 pct in January over December.

At 1.15 pm, LME copper for three-month delivery was down at 5,540 usd a tonne against 5,580 usd at the close Friday.

Neil Buxton, managing director of GFMS Metals Consulting, said the market is not too worried about the rise in Chinese imports because global inventories are rising at the same time.

'There seems to be sufficient production available for the market to absorb higher Chinese demand,' he said.

The LME said in a daily report earlier inventories held in its warehouse rose by 425 tonnes to 216,050 tonnes. LME stocks have more than doubled since the start of last year.

Buxton said he expects copper might edge higher this week because there are some supportive factors in the market such as the possibility of strike action at Southern Copper's smelter in Peru.

A union at the smelter has set a strike deadline for Feb 19. It is expected to enter into new talks with Southern Copper this week.

'I think in the short term we might see some upward movement but I think there has to be quite a lot of bullish news around to turn around the overall downtrend in copper,' Buxton said.

Tin surged to 12,550 usd a tonne, after hitting a new all-time high of 12,750 usd earlier, after newswires reported at the weekend three directors at tin miner PT Koba Tin had been arrested on counts of illegal tin mining.

The company has also suspended shipments from the island of Bangka in Indonesia.

'I think the critical point is ... there aren't any other producers that can fill the gap being left by lower Indonesian production so further spikes don't come as a surprise,' Buxton said.

Separately, tin remains supported by news out Friday the Bolivian government has seized control of a tin smelter complex owned by Glencore.

In other metals, nickel was up at 36,390 usd a tonne against 36,150 usd, zinc rose to 3,140 usd from 3,130 usd, aluminium edged up to 2,702 usd against 2,700 usd while lead climbed to 1,660 usd from 1,615 usd.

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