Healthy gains for red metal

Strike concerns take red metal price higher

Copper prices ended higher at Comex and LME on Thursday, 31 December 2009. Prices rose due to the possibility of a strike at the world's second largest mine this Monday, 4 January, 2010 as talk broke down between concerned parties. Prices also rose due to strong economic data and weak dollar.

At USA, copper futures for March delivery ended higher by 0.15 cents (0.3%) to 3.3465 a pound. Earlier it touched a high of $3.379. Copper ended FY 2009 higher by 140%.

At LME, copper for delivery in three months ended higher by $45 (0.6%) at $7,375. On 3 July, 2008, prices had touched an all time intra day high of $8,940.

Copper ended substantially higher this year on expectations of revived global economic growth along with a decline in the dollar. The metal was also pushed higher by record first-half imports to China, the world's largest user.

As per reports, workers at Codelco's Chuquicamata mine are expected to go on a strike from 4th January, 2010, in Chile. The company is the world's biggest copper miner.

The current contract for Chuquicamata miners ended on 31 December, 2009 as the workers voted to strike after rejecting a 3.8% pay increase offered by Codelco. The union sought 5%.

In the currency market on Thursday, the dollar index, which weighs the strength of dollar against the basket of six other currencies fell against almost all the counterparts. The dollar index settled for a loss of 0.1% after slipping by almost 0.4% earlier during the day.

Among economic data expected for the day, The Labor Department in US reported on Thursday, 31 December, 2009 that initial jobless claims fell 22,000 to a seasonally adjusted 432,000 in the week ended 26 December, 2009. It marked the lowest level since July 2008. The drop in initial claims figure was more than expected. Just nine months ago, claims peaked at 674,000.

The U.S. buys about 13% of the 17 million metric tons of copper sold annually and China buys about 20%.

In FY 2008, copper prices dropped by 54%. Prior to 2008, copper prices ended FY 2007 with a gain of mere 5.5% after a whopping 44% gain in FY 2006. The price of copper gained every year since 2002 as global economic growth boosted demand for the metal used in pipes and wires.