Forexpros – Copper futures regained strength in thin year-end trade conditions on Wednesday, as ongoing concerns over a disruption to global supplies supported prices ahead of a closely-watched Italian bond auction later in the day.
On the Comex division of the New York Mercantile Exchange, copper futures for March delivery traded at USD3.429 a pound during European morning trade, gaining 0.59%.
It earlier rose by as much as 0.75% to trade at a session high of USD3.439 a pound.
With most investors already away on year-end leave, trading volumes were thin, resulting in tight liquidity conditions and irregular volatility.
Copper’s gains came after workers at Freeport McMoran Copper & Gold’s Grasberg mine in Indonesia halted their return to work on Wednesday following a three-month strike, pending the resolution of a local labor dispute.
The delay in the return to work will push back the resumption of full operations of the world’s second biggest copper mine. In 2010, Freeport sold 1.2 billion pounds of copper from Grasberg.
The company, which is the world’s second largest copper producer, said earlier in December that it expected to lose nearly 100 million pounds of copper output this year due to the strikes after production at the Grasberg mine fell 15% in the first nine months of 2011 from the same period a year earlier.
Meanwhile, Italy was scheduled to sell EUR9 billion of 6-month bills and EUR2.5 billion of two-year zero-coupon bonds later in the day. The country will also auction EUR8.5 billion of long-term debt maturing between 2014 and 2022 on Thursday.
The response to the auction will be a gauge of whether distressed government bonds will be purchased by European banks after the European Central Bank’s cash infusion last week.
Ahead of the auctions, the yield on Italy’s ten-year bonds hovered close to the 7% threshold, a level widely considered unsustainable in the long-term.
Copper prices have lost nearly 25% since the start of 2011 as a deepening euro zone debt crisis and fears over a ‘hard landing’ in China pushed investors to liquidate assets such as industrial metals.
Elsewhere on the Comex, gold for February delivery fell 0.69% to trade at USD1,584.45 a troy ounce, while silver for March delivery slumped 0.6% to trade at USD28.56 a troy ounce.
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