Copper rose on Friday and tin hit another record high, both boosted by supply concerns, and underpinned by data showing the US economy gathered speed in the fourth quarter, although a stronger dollar weighed. Three-month tin on the London Metal Exchange (LME) hit a record $30,040 a tonne, propelled by tightening supply in major exporter Indonesia.
Heavy rains and floods have hit tin miners there, squeezing supply and lifting prices. A senior mining official said the country would restrict annual output to a maximum 100,000 tonnes if high prices trigger a scramble for the metal. "Of all the base metals, tin has had the best fundamentals," said Nic Brown, head of commodities research, economics and strategy at Natixis.
"Supply appears relatively constrained ... Demand remains strong, you have a deficit in the market that is gradually eroding available stockpiles and there is limited capacity for substitution into other materials." Tin closed at $29,600 a tonne from Thursday's last bid of $29,075. Three-month copper on the LME was $9,635 a tonne, up from Thursday's close of $9,441, getting a lift from the US data, but gains were limited by a stronger dollar.
The US economy grew at a 3.2 percent annual rate in the final three months of 2010, after expanding at a 2.6 percent pace in the third quarter. The rise was a touch below economists' expectations for a 3.5 percent rate. "The data was slightly weaker but it doesn't seem to have had an enormous impact on metals. When you get this data it moves the currencies," analyst Daniel Major at RBS Global Banking & Markets. Chilean copper output fell 1.6 percent in December compared with a year earlier but remained stable for 2010 as a whole, with an annual production of 5.412 million tonnes.
Looking to next week, top consumer China goes on holiday for the Lunar New Year. China accounts for nearly 40 percent of global copper consumption. Stocks of copper in LME warehouses continued a recent climb, which has dented investors' confidence in the demand outlook, rising 800 tonnes to 398,075 tonnes, data showed on Friday. But prices remain underpinned by concerns about tightening copper supply, due to falling ore grades in top producers such as Chile as well as labour issues.
LME aluminium was last quoted at $2,472/$2,473 a tonne from $2,427 a tonne. Deutsche Bank's aluminium financing deals hold around 2 million tonnes, Daniel Brebner, the bank's director of commodities research, told a conference. Zinc was at $2,354 from $2,260 a tonne, the biggest gainer among base metals.
"There is some serious short-covering going on," one trader said. On the charts, the metal shot through the 100-day moving average, a technical signal watched by market players. Nickel was $26,620 from $26,495 a tonne. Battery material lead was $2,437 from $2,420 a tonne. It has come under pressure from stocks in LME warehouses, which at 279,025 tonnes are at their highest since April 1995.
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