Seoul, Dec 17: Copper prices on the London Metal Exchange (LME) will likely extend gains later on Thursday after overnight news of the US-British military strike against Iraq, traders said.But they said the rally in copper prices would be short-lived unless the copper market saw major production cutbacks. "The copper market will continue to show some strength today on expected further short-covering, encouraged by the news of US-British air strikes on Iraq," said a trader at a local brokerage.
LME copper prices have benefited from the continuing short covering by funds ahead of the Christmas holidays, after hitting a 12-year low of $1,466 on Tuesday, the trader said.
Three-month copper prices closed $32 a tonne higher at $1,516 on Wednesday's London afternoon kerb close from the previous day's close. But traders said the rally in the copper market would be limited due to ballooning LME stocks and slow demand in Asia unless there were major production cutbacks. A broker in London said on Wednesday mineproduction cutbacks were needed, but that was unlikely to occur before February or March 1999. There was increasing talk among traders in London on Wednesday that shutdowns were on the cards at high-cost mining operations.
LME warehouse copper inventories rose a further 3,250 tonnes in Wednesday's data to 551,625 tonnes, while Comex warehouse copper stocks were up 1,315 short tons to 89,113 short tons in Wednesday night's data.
Another trader pegged resistance for three-month copper prices at $1,570 and support at $1,480 a tonne. The LME three-month copper bid prices were quoted at $1,516/21 at 0330 GMT on Thursday, unchanged from Wednesday's London afternoon kerb close. The aluminium market will likely perk up in line with the copper market on the military strike news and persistent consumer buying at above $1,250 a tonne, traders said.
"Like the copper market, aluminium prices are expected to rise, but caution remains as there has been no change in the fundamentals," said a trader with a generaltrading company.
The trader pegged resistance for three-month aluminium prices at $1,280 a tonne and support at $1,230.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.