Copper prices take a tumble

The base metal, which during December closed within whiskers of $1.65(US) per lb (a spot price record) on Comex and set a 3- month record high on the LME, is currently being traded in New York in the $1.30 range.

“We had a tremendous run-up in the fourth quarter of 1988 — 30-to-40 cents a lb — and in January the prices remained fairly rich,” Thomas Komlos, base metals analyst with investment firm ScotiaMcLeod, told The Northern Miner. “So, after such a surge, it would not be surprising to see copper pulling back.”

Komlos said a further drop in the metal’s price of 20-25 cents would not surprise him, although he would be concerned if the price fell below $1. (Copper averaged $1.18 in 1988 on the LME.)

Metals prices in general, with the exception of aluminum, continue to do well, he said. While he expects metals prices to hold up at least until mid-year, Komlos said the key issue is whether the economy is heading for a recession.

Word out of Peru, a country blessed with a variety of precious and base metals but where labor and management have not been getting along of late, is that further trouble in the form of a strike, at least at one mining operation, has been headed off. Metal workers at other operations in the country continue to negotiate.

In Chile, damage is being assessed following an explosion at Codelco’s new flash furnace at Chuquicamata. Losses of a minimum 8,000 tonnes copper are expected. Workers at the Cobre de Mexico copper refinery in Mexico have settled a 6-day wage strike, the agreement calling for a 16% salary hik e, Metals Week reports.

The increase in warehouse stocks is attributed by the research department of Barclays de Zoete Wedd to the de-stocking by some companies at year-end, the slowness of some mills in starting up again after the year-end holidays, and to the well covered positions of more than a few consumers because of forward purchases in November and December.

“In the longer term, the availability of metal will be limited by the output capacity of the smelters, even though the concentrate supply is increasing,” writes the investment firm.

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