Copper Futures Lifted by Bullish US Data, Eurozone Debt Action Plan

By Leia Toovey- Exclusive to Copper Investing News

Copper futures were volatile on Tuesday, but in the end closed higher for the second-straight day as better-than-expected US consumer confidence data and a relative calm tone in the European markets overshadowed a disappointing home sales data.

Earlier in the day, copper slid as Standard & Poor’s Case-Shiller home-price index showed prices eased in September from a month earlier, the first sequential decline after five straight increases. Markets eventually shrugged off this data point once the Conference Board released its gauge of US consumer confidence, which showed that confidence surged in November to the highest level since July, beating economists’ expectations and pushing equities higher. Also, markets were still feeling the after-effects of record Black Friday shopping results, which had pushed equities, and copper, higher on Monday. The most actively traded copper contract, for December delivery, rose 1.55 cents, or 0.5 percent, to settle at $3.3760 a pound on the COMEX division of the New York Mercantile Exchange.

Adding further upside to copper is an improving outlook that European leaders will act in unison to prevent a debt crisis. On Monday, it was announced that Europe’s rescue fund may insure bonds of debt-stricken countries with guarantees of 20 percent to 30 percent, depending on financial markets, according to guidelines that finance ministers will discuss this week. Through most of November, copper prices slumped under pressure as investors dumped growth-sensitive assets on the chance that Europe’s debt crisis could trigger a credit crunch.

Still, data released from the Commodities Futures Trading Commission, which was delayed due to the Thanksgiving holiday, painted a “less than optimistic” picture for copper. According to CFTC data, fund managers continued their bearish streak in COMEX copper futures and options for a tenth week. Speculative traders such as hedge funds and managed money funds cut 1,639 long positions, or bets on higher prices, and added 2,601 short positions, or bets on lower prices, in the week ended November 22. This took the net short position up 121 percent, to 7,731 contracts, from 3,491 short contracts a week earlier. Shifts in the net position are seen as indicators of a change in trader sentiment.  Traders have held a net short position in 12 of the past 14 weeks, after breaking a streak of almost two consecutive years of bullish bets in August.

Labor disputes

On Tuesday, Chile’s giant Collahuasi mine announced that its copper concentrate output has been halted and its copper cathode production is limited due to a workers’ stoppage that started on Monday. Some workers in Collahuasi, the world’s No. 3 copper mine, on Monday downed tools over fears of coming layoffs. The company later on Monday announced it had laid off a “limited” number of workers, a move that could heighten tensions between management and the union, and said on Tuesday it had implemented a contingency plan. Workers at Collahuasi mine just recently ended a strike that began on October 29 after reaching an agreement with management over bonus payments. Collahuasi is co-owned by Xstrata (LSE:XTA) and Anglo American (LSE:AAL).

There has been a great deal of labor disputes, this year, at copper mines. Workers at Freeport McMoran’s (NYSE:FCX) Grasberg mine are still on strike, making the current labour dispute the longest in Indonesia’s history. They walked off the job on September 15. Grasberg has been forced into declaring Force Majeure on copper shipments; the mine is reportedly operating at 5 percent of its capacity. Workers at FCX’s majority owned Cerro Verde mine in Peru agreed, yesterday, to end a strike that began almost two months ago. Union workers walked off the job on September 29 to back demands for higher pay. The union said Monday no agreement was reached with the company. However, workers expect authorities from Arequipa region, where the mine is located, to issue a resolution in the coming days in order to resolve the dispute.

Company news

Canyon Copper Corp. (TSXV:CNC) has entered into an assignment agreement with Metamin Enterprises Inc., a company controlled by Benjamin Ainsworth, Canyon’s President, Secretary and Director, to acquire the former Placer Dome Moonlight Project, a bulk tonnage porphyry copper, gold, silver property. The property is located on the northern end of the very productive Walker Lane Porphyry Trend that includes major past producers such as the Yerrington Mine in Nevada.

Securities Disclosure: I, Leia Toovey, hold no direct investment interest in any company mentioned in this article.