LME copper jumps above $8,000 on supply concerns

LONDON, April 17 - Copper jumped over the critical $8,000 a tonne level after concerns about possible supply disruptions and a weaker dollar boosted speculative buying, analysts said.
London-listed miners like Vedanta Resources , Kazakhmys , BHP Billiton and Anglo American pared earlier losses on the back of stronger metal prices and closed with slight losses or gains.

Copper for delivery in three months on the London Metal Exchange hit $8,090 a tonne, its highest since September 7, lifting its gains in 2007 to 28 percent.

The metal ended the official session at $8,050, rising 4 percent from Monday's close.

In New York, most-active July copper surged 13.70 cents or nearly 3.9 percent to settle at $3.6790 per lb on the New York Mercantile Exchange's COMEX division, easing back from a new contract peak of $3.6970.

Copper for May delivery ended up 13.75 cents to $3.6770, after climbing to a new life-of-contract high of $3.6975.

"It is a combination of better than expected data from the U.S. and a weaker dollar...Concerns about supply disruptions added to those," analyst Marc Elliot at Numis Securities said.

The possibility of a strike in Indonesia has helped to boost copper this week. Workers at Freeport's Grasberg mine in Papua called off a planned meeting with the firm on Tuesday and said they would go ahead with a protest rally.[nJAK204640]

"Metals have been tracking the dollar in the last week or two," said Jon Bergtheil, global metals strategist at JPMorgan.

The dollar fell to a new two-year low versus the euro and a 15-year low against sterling after a report showed core U.S. consumer prices rose by less than expected in March, giving the U.S. Federal Reserve room to cut interest rates this year.

SHORT COVERING

"There's still some speculative short covering," analyst Kevin Norrish at Barclays said. Short positions aim to make money from falling prices and over the last couple of months much of the rise in copper prices has been due to the unwinding of such positions.

"Nobody wants to have a short in copper with an unpredictable situation in Indonesia, inventories falling and Chinese imports exceptionally high. It is a tight enough market currently and thats's a very supportive factor," he said.

Stocks of copper at LME warehouses stand at 172,025 tonnes, the lowest since December 12 and down about 20 percent since climbing above 216,000 at the end of January.

Other base metals rallied across the board with tin setting a fresh record high at $14,950 a tonne and ending the official session at $14,850, up 2.2 percent from Monday's close.

Tin has gained about 25 percent this year on concerns about supplies from Indonesia, the world's second biggest producer.

Indonesia's government last October shut down independent smelters after a police raid on producers operating without licences. Only two export permits have since been approved.

Aluminium rose to $2,895 a tonne from $2,825 on Monday. The market, aware of a long dominant position, is watching the growing number of outstanding option contracts to buy aluminium at and above $2,900 in June.

"It could be another attempt to squeeze the market," an LME trader said. "The open interest (outstanding contracts) is a lot bigger than it was in December and January."

Zinc jumped more than 6 percent to hit $3,720 on short covering, before ending the day at $3,705 from Monday's $3,500.

"I do not think what we see is related with supply and demand. What's rather driving the move up is short covering," Norrish said.

Nickel surged by 4.5 percent to $48,300 and lead closed slightly higher at $2,015.