Copper surges to 14-month high
Tuesday, 24 November 2009
SINGAPORE, Nov 23 (Bloomberg): Copper futures in London, New York and Shanghai rallied to 14-month highs in Asia as expectations for further dollar weakness increased investor interest in physical assets as alternative investments.
The metal used in construction and automobiles has more than doubled this year in London as the dollar fell 7.2 per cent against a basket of six major currencies, encouraging investment in raw materials. The most accurate dollar forecasters predict the currency will continue sliding as record low interest rates, a widening trade deficit and climbing unemployment weighs on it.
"Broad price increases of this magnitude in these and other metals while physical market indicators are highlighting an increased availability of metal for prompt delivery suggest that the major buying impetus came from the financial sector," Morgan Stanley analysts led by Hussein Allidina, said in a note.
Copper for delivery in three months on the London Metal Exchange gained as much as 2.2 per cent to $6,998 a metric tonne, the highest price since Sept. 24, 2008, and traded at $6,995 at 3:20 p.m in Singapore. The March-delivery contract rose as much as 2.1 per cent to $3.20 a pound on the Comex division of the New York Mercantile Exchange, the highest since Sept. 23, 2008.
February-delivery copper on the Shanghai Futures Exchange rose as much as 2.6 per cent to 55,060 yuan ($8,064) a tonne and ended the day at 55,020 yuan.
The dollar fell Monay for the first time in three days against the euro on speculation the Federal Reserve will keep its stimulus measures in place and ensure interest rates remain low. It was at $1.4959 per euro from $1.4862 on November 20.
Still, inventories in Shanghai are at a five-and-a-half- year high, having risen for a third week to 107,405 tonnes. Copper stockpiles tallied by the London Metal Exchange climbed to 421,875 tonnes on November 20, the 14th straight daily increase and the highest level since April 27.
The resolution of an almost six-week strike at BHP Billiton Ltd's Spence copper mine in Chile also failed to damp the rally. Workers will receive a 4 per cent pay rise for a 41-month long contract and a one-time bonus of 7 million pesos ($13,961) besides other benefits, BHP's Santiago press office said in an e-mailed statement.
"Investor appetite is so great at the moment that it really doesn't matter what the fundamentals are," Li Rong, chief analyst at Great Wall Futures Co., said from Shanghai.
Among other LME-traded metals, zinc gained 2.6 per cent to $2,314 a tonne, lead added 2.8 per cent to $2,411 a tonne, and nickel was up 3 per cent at $17,100 a ton. Aluminum climbed 0.6 per cent to $2,073 a tonne, while tin rose 1 per cent to $15,100 a tonne.
The metal used in construction and automobiles has more than doubled this year in London as the dollar fell 7.2 per cent against a basket of six major currencies, encouraging investment in raw materials. The most accurate dollar forecasters predict the currency will continue sliding as record low interest rates, a widening trade deficit and climbing unemployment weighs on it.
"Broad price increases of this magnitude in these and other metals while physical market indicators are highlighting an increased availability of metal for prompt delivery suggest that the major buying impetus came from the financial sector," Morgan Stanley analysts led by Hussein Allidina, said in a note.
Copper for delivery in three months on the London Metal Exchange gained as much as 2.2 per cent to $6,998 a metric tonne, the highest price since Sept. 24, 2008, and traded at $6,995 at 3:20 p.m in Singapore. The March-delivery contract rose as much as 2.1 per cent to $3.20 a pound on the Comex division of the New York Mercantile Exchange, the highest since Sept. 23, 2008.
February-delivery copper on the Shanghai Futures Exchange rose as much as 2.6 per cent to 55,060 yuan ($8,064) a tonne and ended the day at 55,020 yuan.
The dollar fell Monay for the first time in three days against the euro on speculation the Federal Reserve will keep its stimulus measures in place and ensure interest rates remain low. It was at $1.4959 per euro from $1.4862 on November 20.
Still, inventories in Shanghai are at a five-and-a-half- year high, having risen for a third week to 107,405 tonnes. Copper stockpiles tallied by the London Metal Exchange climbed to 421,875 tonnes on November 20, the 14th straight daily increase and the highest level since April 27.
The resolution of an almost six-week strike at BHP Billiton Ltd's Spence copper mine in Chile also failed to damp the rally. Workers will receive a 4 per cent pay rise for a 41-month long contract and a one-time bonus of 7 million pesos ($13,961) besides other benefits, BHP's Santiago press office said in an e-mailed statement.
"Investor appetite is so great at the moment that it really doesn't matter what the fundamentals are," Li Rong, chief analyst at Great Wall Futures Co., said from Shanghai.
Among other LME-traded metals, zinc gained 2.6 per cent to $2,314 a tonne, lead added 2.8 per cent to $2,411 a tonne, and nickel was up 3 per cent at $17,100 a ton. Aluminum climbed 0.6 per cent to $2,073 a tonne, while tin rose 1 per cent to $15,100 a tonne.