LONDON: Copper prices were sent to a record high on Wednesday by a weaker dollar, supply concerns and tighter availability of metal in warehouses registered with the London Metal Exchange.
Benchmark LME three-month copper was up 1.7% at $11,333 a metric ton by 1102 GMT after touching a record high of $11,434.50.
“Copper is looking quite bullish after breaking to new highs, with algorithmic models flashing buy signals. There’s a decent chance prices could climb toward $12,000 a ton from here,” said Dan Smith, managing director of Commodity Market Analytics.
Adding to the bullish sentiment, data showed business activity in the euro zone expanded in November at its fastest pace in two and a half years, reinforcing a mix of factors already supporting the metal.
The LME data showed net fresh cancellations of 50,725 tons in warehouses in Asia on Tuesday, bringing the available, or on-warrant, LME copper stocks to their lowest since July at 105,275 tons.
“It remains to be seen whether this metal actually leaves the warehouses, but there’s still strong interest in exporting copper to the U.S., given the Comex premium over the LME benchmark,” Smith added.
The Comex copper premium over the LME benchmark is attracting inflows into Comex copper stocks that are already at a record high.
The LME cash copper premium over the three-month contract hit $69 a ton on Tuesday for its highest since mid-October, indicating some tightness in near-term supply.
Growing expectations of an interest rate cut by the U.S. Federal Reserve next week as well as a weaker dollar also supported the upward momentum in base metals.
The weaker U.S. currency makes dollar-priced metals more attractive for buyers using other currencies. Lower interest rates, meanwhile, improve prospects for growth-dependent metals.
Among other LME metals, aluminium rose 0.5% to $2,880 a ton, zinc gained 0.2% to $3,066, lead was up 0.5% at $2,005 and tin climbed 1% to $39,505 while nickel advanced 0.7% to $14,895.
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