Copper firms on falling inventories

The Australian market is likely to open directionless, although Australians may know this afternoon what the composition of the next government is as one of the three rural independents whose backing will decide Australia's government says they still haven't made their mind up, but a decision was expected this afternoon.

More than two weeks after going to the polls, Australians are expected to find out today whether Labor or the Liberal-Nationals will form the next minority government.

Copper rose for a fourth day in London as a decline in inventories gave traders cause to think of even higher copper prices to come.

Inventories fell for a 28th week in a row last week, the longest such streak of declines since August 2004, and are down 21 percent this year, on course for the first annual retreat in six years.

Copper for delivery in three months added $63, or 0.8 percent, to $7,709 a ton on the LME. Futures for delivery in December gained 0.5 percent to $3.518 a pound in electronic trading on the Comex in New York.

Investors exchanged 4,417 LME copper contracts, about 13 percent of daily volume on Sept. 3. Comex floor trading is closed today for the Labor Day holiday.

Tin rose 1.3 percent to $21,475. Worries about supply from top exporter, Indonesia and declining inventories have pushed ton prices up 27 percent this year, making it the top performer in the LME complex. Like copper, tin is around 15 percent off its all-time high struck in May 2008.

Nickel for three-month delivery on the LME advanced 2.5 percent to $22,150 a ton after reaching $22,250, the highest price since Aug. 19. Inventories, which fell for six months through July, slid for a second day to 119,886 tons. Stockpiles rose 1 percent last month, below the year-earlier 7.1 percent increase and the 5.6 percent gain in August 2008.

“Inventory build in the base-metal space during a seasonally weaker demand month was much lower in comparison with both August 2008 and 2009,” analysts at Macquarie Bank Ltd. led by Jim Lennon said in a report today.

Aluminum rose 2.1 percent to $2,193 a ton and zinc advanced 2.1 percent to $2,196 a ton. Tin slid 1.7 percent to $20,850 a ton and lead rose 1.3 percent to $2,196 a ton.