Copper edges lower as LME inventories climb higher once again

Copper prices edged lower following yet another gain in London Metal Exchange inventories, but analysts said fears over potential supply disruptions were limiting the downside.

At 11.53 am, LME copper for three-month delivery had edged down to 6,865.50 usd a tonne from 6,880.00 usd at the close on Friday.

The LME said in its daily report that copper stocks held in its warehouses gained another 2,250 tonnes to total 168,600 tonnes. Stocks have risen more than 40 pct since mid-October.

Analysts noted that copper failed to climb on Friday even after US non-farm payrolls data for November came in better than expected, helping ease concerns about the slowdown in US economic growth.

'Copper has failed again to breach resistance above 7,200 usd a tonne and its subsequent close below 7,000 usd a tonne should see short-term traders/CTAs pushing prices lower,' said UBS Investment Bank analyst Robin Bhar.

He added, however, that 'scaled-down buying from consumers and investors could slow or even halt the slide,' as could fears over possible labour disruptions at key mines.

Union workers at Chile's Altonore copper smelter, owned by Xstrata, voted to strike on Saturday, although the strike could still be averted if both sides request government mediation.

Meanwhile, traders are eyeing ongoing labour negotiations at Codelco's Norte division in Chile, where workers have rejected a 2 pct pay hike offer. Codelco is the world's largest copper producer.

It is currently negotiating a new wage agreement with workers, as the old one expires on Dec 31. As with Altonorte, both sides could request government mediation and extend talks for five days if an agreement is not reached in time.

Elsewhere, tin surpassed Friday's new record close of 11,100 usd a tonne to trade at 11,200.00 usd a tonne, as the metal remained supported by worries over the security of supplies.

Standard Bank analyst Michael Skinner said a clampdown by the Indonesian government on illegal miners is supporting the metal, as is a consistent growth in demand.

Among other metals, nickel had fallen to 34,025.00 usd from 34,275.00 usd at the close on Friday, zinc to 4,295.00 usd from 4,359.00 usd, lead had risen to 1,740.00 usd from 1,730.00 usd while aluminium had fallen to 2,798.50 usd from 2,825.00 usd.