Copper reached a two-week high in London on concern a deadly mine accident will crimp supply and before a report projected to show stronger house sales in the U.S., the second-biggest consumer of the metal.
Operations will remain suspended at Freeport-McMoRan Copper & Gold Inc.’s Grasberg complex in Indonesia until a probe of a tunnel collapse that killed 28 people is concluded, the government said yesterday. Sales of existing houses in the U.S. were the highest since November 2009 in April, economists said before a report due at 3 p.m. London time today.
“A supply outage in Indonesia’s Grasberg mine after a terrible mining disaster is being followed by the market,” Mark Pervan, an analyst at Australia & New Zealand Banking Group Ltd. in Melbourne, wrote in a report today. “Any prolonged shutdown will likely impact supplies.”
Copper for delivery in three months climbed 1.1 percent to $7,452 a metric ton by 10:54 a.m. on the London Metal Exchange. Prices reached $7,479, the highest since May 8. Copper for delivery in July gained 1.1 percent to $3.3795 a pound on the Comex in New York.
The Copper Development Association says construction generates about 40 percent of demand for the metal. U.S. building permits, a proxy for future construction, were the highest in almost five years in April, government figures showed last week.
Short-covering, or buying of copper to close out bets on lower prices, helped to support the market yesterday, according to RBC Capital Markets Ltd. The metal gained as much as 0.7 percent on the LME yesterday before closing lower.
“The market is heavily short and a continued melt-up through $7,500 could entice further short-covering from CTAs who trade over the medium duration,” analyst George Adcock at Marex Spectron Group in London said by e-mail, referring to Commodity Trading Advisers. “With this in mind, the potential for another extreme short-covering-driven rally is not unforeseeable.”
Stockpiles of copper monitored by the LME rose 0.4 percent to 627,275 tons on deliveries in Johor, Malaysia, daily exchange figures showed. Orders to remove the metal from warehouses fell 0.9 percent to 229,200 tons.
Zinc, lead, aluminum, nickel and tin climbed in London.