By Leia Michele Toovey-Exclusive to Copper Investing News

Copper fell for a second day as a stronger dollar made the commodity more expensive for those holding in other currencies; the Dollar Index, a gauge of the currency’s value against six major counterparts, rose for a second day. Further downward impetus came as stockpiling inventories in China rekindled the fear that demand from the nation will wane.  So far this year the red metal’s demand rebound is mainly a China story. Inventories of copper in Shanghai warehouses rose to the highest since March 2008.

Copper for three-month delivery fell 3.4 per cent, to $5,055 a tonne on the London Metal Exchange. Copper futures for July delivery fell 7.4 cents, or 3.1 per cent, to $2.2995 a pound on the New York Mercantile Exchange’s Comex division. In Shanghai, copper fell by the exchange-imposed 5 per cent daily limit.

On Thursday, U.S. dollar weakness, constructive import data from top metal consumer China, and upbeat U.S. retail sales and weekly jobless claims data drove benchmark July COMEX contract to an eight-month peak at $2.4575 a lb.  However, the rally was snapped with a stronger tone in the U.S. dollar and general weakness in the broader commodity complex. London Metal Exchange warehouse stocks decline by 2,900 tonnes to 290,275 tonnes on Friday. Canceled warrants, metal earmarked for delivery, fell to 24,725 tonnes on Thursday, down from 74,500 tonnes in May. Copper inventories in warehouses monitored by the Shanghai Futures Exchange rose 33 per cent to 60,647 tonnes from 45,480 tonnes a week earlier. COMEX copper stocks rose by 39 short tonnes to 58,523 short tonnes as of Thursday.

Company news

Despite depleting inventories and the continuous increase in copper prices, Freeport CEO Richard Adkerson says there is not yet enough demand to increase production.  ”Even though we have gone through a worldwide recession, copper inventories globally are very low,” Mr. Adkerson told the RBC Capital Markets mining conference in Toronto. “The anomaly is that there has been a dramatic drop in prices, but still there is a tight physical marketplace. That is positive for copper,” he said in comments monitored via a web cast in New York. Phoenix, Arizona-based Freeport is the world’s largest publicly traded copper producer and operates the huge Grasberg copper and gold mine in Indonesia as well as mines in North and South America and Africa.

Asked at what copper price Freeport would begin to restore production it had cut back, Adkerson said price was only one factor in that decision. “Demand in North America, Europe and Japan continues to be weak and events in China will be what drives the copper price in the near term,” he said. “To ramp back up would be a big operation without recovery of demand in North America- and there is always a risk that China will stop buying.”

Vedanta Resources PLC and Grupo Mexico SAB are currently in a battle to take copper giant Asarco LLC out of bankruptcy.  This week, it is expected that Vedanta Resources PLC will increase its bid, countering an offer filed by Mexican mining conglomerate Grupo Mexico SAB. An amended debtor’s filing that may be submitted as soon as Monday will show a unit of Vedanta, Sterlite Industries will increase to $770 million from $600 million the note portion of its offer,  valued at between $2 billion and $3 billion including all liabilities. Sterlite Industries, also will improve its terms of payment to a crucial class of creditors: asbestos claimants, who had been seeking a settlement of personal-injury claims from damages arising from Asarco’s mining, smelting and refining operations across the American West since 1899. Before the amended filing, asbestos claimants had been backing a bankruptcy reorganization plan submitted earlier this month by Asarco’s estranged parent, Grupo Mexico.

This latest move by Vedanta’s Sterlite unit could well trigger a bidding war, especially now that a third party, bondholder Harbinger Capital Partners, also has decided to make a play for Asarco’s assets. The struggle to determine control of Asarco as it emerges from its 2005 Chapter 11 bankruptcy filing has involved legal and financial maneuvers in Europe, Asia, South America and North America with offers and counteroffers rising and falling with global copper prices.