Copper concluded 2010 with a run of record highs, rising 2 percent on Friday as undimmed demand from China and the prospect of fresh fund investment had analysts pointing to further gains next year.
After a year of divergence for the base metals complex, with tin leading gains at 59 percent and zinc dipping 5 percent, copper is widely expected to build on its nearly uninterrupted rally in the second half of 2010 as ore grades decline, new mines remain scarce and top buyer China grows.
Prices have zipped to record highs in each of the past three days, undettered by Beijing's Christmas rate hike or the biggest rise in London Metal Exchange stocks since February. Instead, traders have focused on the steep premium for prompt copper as a signal of tight supplies, and are betting on a handful of new exchange-traded funds to open the door for new investors who had shied away from futures.
"I think it will benefit from backwardation and a tight physical market. That's what we look for when we go long. Copper is pretty much perfect from that point of view," says fund manager Patrick Armstrong of Armstrong Investment Managers, who expects prices to rise another 25 percent. In its December forecast, Goldman Sachs said it expected prices to hit $11,000 this time next year.
Benchmark copper on the London Metal Exchange ended ring trading bid at $9,960 a tonne, securing a 31 percent gain from $7,375 a tonne at the close on December 31, 2009. It earlier reached a record of $9,687 on Friday, its third peak in a row. US copper futures on the COMEX gained 33 percent this year after a 1.9 percent rise to $4.4470 per lb, having logged its latest record high of $4.4520. A sharp drop in the US dollar aided gains on Friday amid trade volume that was about one-third the norm at 12,000 lots.
Comments
Comments are closed for this article.