Copper moves higher

Copper came within a whisker of record highs on Tuesday as investors shone the spotlight on improving economic growth prospects and a softer dollar helped boost sentiment. Three-month copper on the London Metals Exchange ended at $9,700 a tonne from $9,630 on Monday.
Earlier the metal used in power and construction touched $9,736 a tonne, not far from the all-time high of $9,754 a tonne hit on January 4. "Today's increase is mainly macro-based," RBS analyst Daniel Major said, adding: "EU equities were supporting industrial metals."
Hopes for good company results drove European shares to a 28-month high on Tuesday alongside indications the economic outlook was improving. A weaker US dollar supports industrial metals as it makes dollar denominated commodities cheaper for holders of other currencies.
The outlook for copper in the long term is positive as increasing Chinese demand, falling copper grades and difficulties in financing new projects are to underpin prices, according to VTB Capital analyst Andrey Kryuchenkov. "Copper is certainly looking good in the long run as there is a demand/supply imbalance," he said. News that Chile's Collahuasi copper mine will ship 20,000 tonnes of concentrate per month via the Arica port until its own sea terminal has repaired a damaged ship loader had little lasting impact. "It's not so bullish because Collahuasi's going to transport from another port, there may be a temporary blip in the copper price," said Carl Firman, analyst at Virtual Metals. "But I can still see the copper price at $10,000 a tonne this year on a number of factors."
Stocks of lead surged by 29,825 tonnes to a 15-year high of 243,950 tonnes, reflecting large inflows and a supply surplus. Lead finished at $2,623.5 from a close of $2,645. Inventories of copper in LME warehouses fell 1,075 tonnes on Tuesday to 377,925 tonnes, but are little changed so far in January. Copper stocks have mostly climbed since mid-December but are down by about a third from cycle highs hit last February at 555,075 tonnes.
Rio Tinto's mined copper output fell 9 percent in the fourth quarter of 2010 from a year ago. Refined copper output dropped 6 percent, the miner said in a quarterly report. Nickel stocks fell by 414 tonnes on to 137,352 tonnes, also little changed on the month to date. Nickel closed at $26,100 a tonne from Monday's $25,835 a tonne close. Stainless steel ingredient nickel benefits from accelerating demand from Chinese steelmakers, analysts said.
"Q4 was a strong quarter for stainless steel production and we think we will see another strong quarter, the first quarter this year," Major said. "But there are new projects coming on stream and we need to watch out for higher nickel and nickel pig iron supply." Zinc ended at $2,436 versus Monday's close at $2,455. LME aluminium finished at $2,450 from a close of $2,435. Tin ended at $26,925 a tonne, unchanged from Monday's close.