Thursday, 29 November 2012 17:21
LONDON: Copper climbed to the highest in nearly a month on Thursday, buoyed by hopes that US politicians were hammering out a solution to the "fiscal cliff" of spending cuts and tax hikes.
Three-month copper on the London Metal Exchange touched an intraday high of $7,839 a tonne, the highest since Nov. 1, and was up 0.8 percent at $7,829 by 1126 GMT.
Other metals made stronger gains than copper, with aluminium and zinc touching seven-week highs.
Copper, which fell half a percent on Wednesday, has gained about 4 percent since touching a two-month low of $7,506 on Nov. 9 after worries about weak demand and potential for the US fiscal cliff to send the world's largest economy back into recession.
Analyst Duncan Hobbs at Macquarie in London said a year-end rally was possible if positive headlines on the global economy and top metal consumer China keeping emerging.
"If we continue to see positive macro-economic data and the US politicians avoid the fiscal cliff, that would be supportive and there might be enough momentum to carry the price into the early $8,000s, that's perfectly plausible," he said.
Investors took heart after US House of Representatives Speaker John Boehner voiced optimism that Republicans could broker a deal with the White House and a conservative congressman said he would back an agreement with President Barack Obama to raise rates on the rich.
The market could get a fillip on Monday after China's official purchasing manager's index is published over the weekend, which is expected to show factory activity in November expanded at its fastest pace in seven months.
"Underlining that, (copper) stocks are pretty light generally speaking and access is not always easy even when stocks exist. You could argue that is also constructive for early next year," Hobbs added.
LME copper stocks are down by a third this year.
The market was also supported on Thursday by a weakening in the dollar against a basket of currencies, which makes metals priced in the US currency cheaper for holders of other currencies.
Still, there was concern by some analysts that underlying physical demand for metals was still sluggish as the world economy fights to gain momentum.
Senior metal executives in China said consumption of copper cathode is likely to grow more slowly there next year, cooling further after the pace of growth looks set to drop by at least a third this year.
On the Shanghai Futures Exchange, the most-traded March copper contract rose 0.37 percent to close at 56,390 yuan ($9,100) a tonne.
Copyright Reuters, 2012