Article from: http://www.metalprices.com/news/article/DJ/178236/dj-wbms-global-lead-market-in-145-700-ton-deficit-jan-mar
By: Susan Thomas and Maytaal Angel
LONDON, May 22 (Reuters) – Copper hit a six week high on Wednesday as a production outage at the world’s second-largest copper mine looked set to continue, though gains were capped as investors digested comments on monetary easing from the U.S. Federal Reserve.
Three-month copper on the London Metal Exchange ended up at $7,475 per tonne, after touching $7,533.75 a tonne, its highest level since April 12. It closed at $7,375 on Tuesday.
Copper has rebounded from 18-month lows hit earlier this month below $6,800 a tonne on growing confidence that the U.S. recovery is on track, but the metal is still down some 6 percent this year.
Investor risk appetite got an initial boost after Fed Chairman Ben Bernanke said monetary stimulus is helping the U.S. economy recover. Appetite was later tempered as the Fed chairman raised the possibility of reducing the Fed’s bond purchases this year if growth improves further.
Copper remained in positive territory, however, on comments from Freeport McMoRan Copper and Gold Inc, which said it would not restart production at its Grasberg copper mine in Indonesia after the tunnel collapse that killed 28 workers until it is convinced of the mine’s safety.
Arizona-based Freeport suspended operations at the remote Papua mine on Wednesday last week.
“Commodity specific investors are watching that quite closely,” Barclays analyst Gayle Berry said.
“We’re a week on and they’re nowhere near closer to re-starting production. The death toll has gone up several fold and there are all sorts of concerns about the impact it will have on labour negotiations.”
Investors are concerned the accident, one of the country’s worst mining disasters, could further strain relations between Freeport and trade unions after a three-month strike in late 2011 and smaller disputes since.
Other supply disruptions, including a landslide at Rio Tinto’s Bingham Canyon mine in Utah, the shutdown of India’s two top copper smelters and some smelters in China cutting output – also cushioned copper prices.
“Production problem stories are finally starting to gain traction in the press. Our current estimate of a 150 kt refined copper surplus still stands, though in a 21 Mt market it’s fairly negligible,” said Standard Bank in a note.
Tin ended up at $21,475 per tonne from $21,270 at the close on Tuesday, zinc closed at $1,881 from $1,851, aluminium at $1,884 from $1,860 and nickel at $15,170 from $15,075. Lead ended at $2,057 a tonne from $2,038.