SYDNEY- London copper built on hefty overnight gains on Wednesday, reversing early losses, while zinc also maintained a firmer tone, supported by supply concerns.
Zinc held its gains on the back of news that processing fees for China’s zinc smelters hit record lows last month as supply from mines continued to dwindle.
Still, a steady U.S. dollar against other major currencies kept trading volumes and currency-based arbitrage activity light across the metals complex. Last week the index rose its highest since December 2002.
Three-month copper on the London Metal Exchange gained 0.1 percent to $5,766 a ton after initially easing at the start of trading. The contract galloped to a one-month high on Tuesday.
The most-traded copper contract on the Shanghai Futures Exchange SCFcv1 rose 2.8 percent to 47,070 yuan ($6,797) a ton, gathering momentum on the back of a surge in Chinese producer prices in December.
Underlying that is rising concerns of further supply-side disruptions.
Workers at Chile’s Escondida copper mine - the world’s biggest - have already rejected a wage offer from BHP Billiton.
Also, a proposed ban on the export of copper concentrates from Indonesia is due to come into force on Jan. 12.
“While the government is expected to issue new export rules later this week, traders appear nervous,” ANZ commodities strategist Daniel Hynes said in a note. – Reuters