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Sunday, 6 February 2011

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Record copper price tests $10,000

Copper has hit a fresh record high just below $10,000 a tonne on hopes of increased demand amid supply shortages, which could be made worse by giant Cyclone Yasi in Australia.

Metals have been strong across the board this week, with tin hitting a record and nickel at its highest since May 2008. The weak dollar has led investors trading in other currencies to seek commodity investments.

Economic data has also shown strong demand from the Asian manufacturing sector, especially for copper. Analysts pointed out that the most recent rally in the copper price may be less about fundamentals than the unwinding of positions in Shanghai ahead of the Chinese New Year. However, there are still signs that there will be a shortage of the red metal this year, as mining companies have been reporting lower than expected production.

BHP Billiton, Xstrata and Rio Tinto found that output dropped 12pc in the first half of 2010. It appears that this trend continued in the second half of last year as well.

Copper prices have tripled over the last two years. The City expects prices to head towards $12,000 per tonne by 2012, owing to spiralling demand and lack of new investment in mines. The metal closed on Wednesday at $9,945.25 a tonne.

Australia's huge Cyclone Yasi forced a copper refinery and coal mines to shut and paralysed sugar and coal exports as it began pounding the northeast coast on Wednesday, threatening to further inflate world sugar, copper and coal prices. The edge of the cyclone, one of the most powerful recorded, came ashore in North Queensland state, heading directly for sugarcane fields and threatening a 300,000-tonnes-a-year copper refinery in the coastal city of Townsville.

"We've shut everything down and that situation is likely to carry on for several days until a clearer picture emerges," said Josh Euler, a spokesman for the refinery owner, Xstrata.

Earlier this week, a 30,000 tonnes-a-year nickel refinery at Yabulu shut down ahead of the cyclone, and the major coal export terminals of Dalrymple Bay and Gladstone stopped loading ships. Shipping in and out of the region has come to a standstill, with ports along hundreds of kilometres of coastline closed and bulk carriers retreating from the cyclone zone to safe anchorages.

Courtesy: The Telegraph

 

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