Copper talks break down, sending prices higher

| August 18, 2006

Copper prices increased by 2.6 percent on Friday as talks in the Escondida mine strike in Chile broke down and BHP Billion, which controls the mine, shut down operations there. The closure resulted in the loss of 26,000 tonnes of copper production per day. Despite Friday’s jump in prices, copper was 1.2 percent lower over the week to close at $7,480 per tonne.

Three-month nickel prices were 4.8 percent higher during the week to $27,900 and the London Metal Exchange took action to settle the market down by imposing a limit of $300 on the spread between cash and futures prices on the metal after the difference between the three-month price and cash price on Wednesday reached over $6,000. LME inventories available for delivery have fallen to only 862 tonnes, less than a day’s global consumption of nickel.

In other base metals, zinc was up by 3.7 percent during the week to $3,262 per tonne on the news that India’s annual consumption of zinc is expected to go up by 10 percent this year. Meanwhile, aluminium dropped 1.9 percent to $2,472 per tonne.

Gold prices dropped 3.3 percent during the week to $611.30 per troy ounce.

Crude oil prices were up slightly on Friday as Brent crude for September delivery added 35 cents to $71.93 per barrel in London and West Texas Intermediate crude September contracts were 29 cents higher to $70.35 per barrel on the New York Mercantile Exchange. The increases came after Iran once again said that it will continue to develop its nuclear capabilities.

The day’s gains did little, however, to dent the losses in crude oil prices over the week. Brent prices over the week were down 4.9 percent, or $3.90 per barrel, while West Texas Intermediate was $4 lower, a decline of 5.4 percent, mostly on the ceasefire between Israel and Hizbollah and on an announcement from BP that it will be able to keep some of its Prudhoe Bay production online while it repairs damaged pipelines there.

Nymex unleaded gasoline prices were also up slightly on Friday, by 0.2 cents to $1.9500 per gallon, but over the week the price for September futures were 11.4 cents, or 5.5 percent, lower during the week.

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