Shanghai copper gains

US copper futures rallied to a record high on Tuesday, and Shanghai metal gained almost 1 percent, supported by sharp falls in the dollar, a strong Chinese currency and supply threats. The benchmark fourth month copper contract on COMEX rallied 0.6 percent to an all-time high of 430.75 cents/lb, while the dollar fell 0.43 points to 79.934 versus a basket of currencies.
Technically, COMEX copper was expected to briefly enter a 440-450 cents/lb range over the next four weeks and then retrace to 404.50 cents, according to Reuters technical analyst Wang Tao. Shanghai copper rose 600 yuan to 69,310 yuan a tonne. The People's Bank of China (PBOC) fixed the yuan's daily mid-point versus the dollar at 6.6252, just shy of the level of 6.6239 hit on November 12, the strongest yuan mid-point since its landmark revaluation in July 2005.
"It's a dollar play. Big losses in the greenback are giving copper and other commodity prices a push. In the case of copper, there are a number of other bullish fundamental factors at work too," a trader in Hong Kong said. The continued closure of Chile's Patache port terminal since a December 18 shiploader accident will continue to underpin sentiment, with the Collahuasi mine maintaining production but as yet unable to secure an alternative route to get the concentrate to customers.
In the longer term, expectations of a supply deficit next year, was also expected to keep copper on the upward trajectory that has seen it rally by more than a quarter this year. In other metals, zinc rose 1 percent to 18,890 and aluminium rose 20 yuan to 16,715 yuan. On a volume weighted average, the complex as a whole gained 0.7 percent.
China's central bank raised interest rates on Saturday for the second time in just over two months as it stepped up its battle to rein in stubbornly high inflation. The London Metal Exchange was closed on Monday for Christmas holidays and trade will only resume on Wednesday. When Shanghai closed on Friday, LME copper stood at $9,345 a tonne.