By Leia Michele Toovey- Exclusive for Copper Investing News
Friday marked the kick-off of the Beijing Olympics, a milestone that has been long anticipated by the market. India’s copper futures opened with little change on Monday as rising stocks and shrinking demand continued to cap the upside. Early morning, the benchmark August copper on the Multi Commodity Exchange of India (MCX) was up 0.24 per cent at 319.60 rupees per kg. Copper prices are expected to trade steady as a result of the absence of new market cues. Pre-Olympic copper demand had capped off as China repressed industrial activities in efforts to curb pollution. The market is expected to remain stable through the duration of the Olympics, with volatility possibly returning after the Olympics and as the summer closes due to a more realistic demand outlook. However, there may be some upset in this expected trend due to the Georgian and Russian battles dangerously close to a major oil pipeline. The two have ignored the supposed truce that Olympic Games are supposed to bring to the international scene and are instead waging war.
In Asia, copper remained near a six-month low as the dollar rallied, reducing buying of commodities as an alternative asset and inflation hedge. Copper fell 6.3 percent last week as the dollar climbed and inventories neared a six-month high amid slow seasonal demand. The dollar gained 5 percent the past month against its six major counterparts, while an index tracking six industrial metals fell 15 percent in the same period. The dollar and the inventory are the two weights on copper, which has further room to decline. Chinese buyers are still reluctant to emerge because of poor domestic demand. Copper for October delivery fell 1.9 percent to 57,870 Yuan ($8,429) a ton on the Shanghai Futures Exchange at the same time.
London Metal Exchange three-month copper fell $10 to $7,400, following a 3.3 percent slide on Friday, breaking technical support at $7,600. It ended the week 6.3 percent lower, its biggest weekly fall since May 2007.The Euro traded around its weakest in five months against the dollar after its biggest move in almost eight years on Friday dragged commodity prices lower, while fighting in Georgia supported energy prices.
Energy prices are expected to recover with what’s going on in Georgia and they will drag metals up. The growing conflict between Russia and Georgia is threatening an oil pipeline, which extended positive support to oil. On Monday oil was up 1 percent. This price increase is still a very miniscule reaction, and only the ensuing days will elaborate how much of an effect the conflict will extend to energy prices. The Russians are playing hardball, so it is possible that this conflict will be with the markets for quite some time. Crude oil topped $116 a barrel on Monday, rebounding from the previous session’s $5 decline.
The high prices of copper are suggesting that crime pays. Copper thefts continue to escalate, it seems every day there is a new report on a copper theft. Thieves are finding more and more creative ways to snatch the red metal, hoping to gain some cash by trading it in for scrap. Some of these thieves can’t be too hard up, as Duke Energy plant had their security gates ripped down by thieves trying to get at the copper, a feat that would have involved some pretty heavy machinery. In addition, thieves are willing to risk their lives. Thefts at Duke Energy’s substations involved stripping copper wire off of utility poles that carry 7,200 volts. Since copper prices reached record highs, copper thefts have become an increasingly widespread national problem in the US with everything from the power stations mentioned above to pipes at churches being ripped off.
World Copper Giant Freeport is facing the threat of a lawsuit from a Tribal Chief in Indonesia, Fabianus P., chief of the Kapiraya tribe. He claims that tailings from Freeport’s huge gold and copper mine in Indonesia’s easternmost Papua province are causing more widespread ecological damage than previously thought, and as a result local village communities are facing water shortages as their rivers were contaminated by the chemical pollutants. Freeport Indonesia is one of Indonesia’s most significant taxpayers; they paid the government 1.8 billion dollars last year.
