Base metals displayed resilience Thursday in spite of concerns that China might be forced to raise interest rates to cool rapid growth in its economy.
Copper retreated 2 per cent to $7,825 a tonne in London trading. In Shanghai copper had fallen 4 per cent, the maximum daily move allowed.
Traders remain preoccupied with developments at the giant Grasberg copper mine in Indonesia, where output has been disrupted by protesting workers.
The Indonesian government said Grasberg’s open pit mine was running at 20 per cent capacity and the underground mine was operating at 60 per cent capacity.
Grasberg, which is operated by Freeport McMoran, is one of the largest copper mines in the world, with annual production of about 530,000 tonnes.
Merrill Lynch warned that a correction for copper prices was likely as the slowdown in the US housing market would continue to affect demand, while supply had been relatively unaffected by labour disputes at key mines.
But Bloomsbury Mineral Economics said buoyant industrial activity and the approaching peak for seasonal demand could push copper beyond last year’s record price of $8,590 a tonne.
“Longer term, it is possible to envisage market conditions like today’s continuing for another two years – or longer if project delays continue,” said Peter Hollands, of Bloomsbury.
Tin fell 1.8 per cent to $13,450 a tonne after a sharp fall the previous session on expectations that the supply situation from Indonesia was set to improve.
Oil prices were choppy amid renewed concerns over Iran’s nuclear ambitions and Wednesday’s news of larger-than-expected declines in US petrol inventories.
ICE June Brent gained 23 cents at $66.27 a barrel while Nymex May West Texas Intermediate contract, due to expire Friday, fell $1.37 to $61.76 a barrel and June WTI slipped 80 cents lower to $63.58.
Enbridge has restarted production at reduced pressure on a pipeline carrying crude from Canada to the Midwest in the US while further test are carried out.
Platinum hit $1,300 a troy ounce after ETF Securities announced plans for five physically backed precious metals funds with trading due to start in London on April 24. Nik Bienkowski, head of research at ETF, said each metal might attract $100m of investor interest in the first year.
Gold fell 1.1 per cent to $681.90 a troy ounce.
In Chicago, May wheat futures surged 17½ cents higher to $4.92 a bushel amid concerns about weather-related losses for the winter crop. May corn added 6¾ cents at $3.70¼ a bushel.
