Copper Pulls Back as Supply Issues Wane
March 30 2017 - 6:48AM
Dow Jones News
By David Hodari
The price of copper slipped Thursday, surrendering its overnight
gains as supply-side problems in Indonesia appeared to be close to
ending.
Copper prices fell 0.66% to $5,866.00 a metric ton in midmorning
London trading.
Gold also traded lower, by 0.20% to $1,249.90 a troy ounce,
continuing to come off its political risk-driven gains seen earlier
in the week.
Early-day reports indicated that Freeport-McMoRan Inc. and the
Indonesian government had reached the final stage in negotiations
that could allow the miner to resume copper exports.
Indonesia's Energy and Mineral Resources minister, Ignasius
Jonan, said Thursday that Freeport had in principle agreed to new
goverment-stipulated regulations, according to Commerzbank's
morning note.
The reported agreement would see Freeport convert its
pre-existing contract into a special mining license, Marex
Spectron's Alastair Munro said.
"The developments at Grasberg might well have had an impact" on
copper's price, Julius Baer's Carsten Menke said. A resumption of
exports from Grasberg, coupled with the end of industrial action at
BHP Billiton's Chilean Escondida mine, would add to global supply
in a market which is already seeing "no signs of tightness," he
added.
While the strikes at Escondida are over for now, the 44-day
action may deliver a 250,000-metric-ton hit to the mine's expected
output for the year, according to Investec analyst Gustavo Lagos.
Prior to the strike, BHP Billiton had been guiding for annual
production of just over 1 million metric tons.
Copper investors were looking for any clues as to President
Trump's tax plan, ahead of his meeting with the National Economic
Council--expected Thursday-- according to Marex Spectron's Dee
Perera.
Aside from that, Chinese manufacturing purchasing managers index
data, quarter-end trading, and movements ahead of the Chinese Qing
Ming holiday weekend were all in traders' sights heading into
Friday.
Gold's price recovery was stymied by a stronger dollar and the
European Central Bank's clarification that its last Governing
Council meeting had not been intended to signal a move to tighter
monetary policy, according to Commerzbank. The WSJ Dollar Index,
which measures the dollar against a basket of currencies, was
recently up 0.11 to 90.17. A stronger dollar makes the metals more
expensive for holders of other currencies.
The revelation that global physical gold demand dropped 18% in
2016--according to data released Thursday by research body
GFMS--may also have dragged on the precious metal.
Among base metals, aluminum was flat at $1,955.00 a metric ton,
lead fell 0.77% to $2,325.00 a metric ton, and zinc was down 0.58%
at $2,842.50 a metric ton, tin fell 0.75% to $19,950.00 a metric
ton and nickel dropped 0.40% to $9,985.00 a metric ton.
Among precious metals, silver fell 0.55% to $18.15 a troy ounce,
platinum rose 0.36% to $956.50 a troy ounce and palladium was down
0.19% at $791.00 a troy ounce.
Write to David Hodari at david.hodari@wsj.com
(END) Dow Jones Newswires
March 30, 2017 06:33 ET (10:33 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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