Markets

Copper hits 3mth high

LONDON : Copper rose on Thursday to its highest in nearly three months as expectations of increasing demand from top con

Published July 7, 2011 Updated July 7, 2011 03:48pm

3 min

Comments

By Muhammad Iqbal

Add BRecorder as a trusted
source on Google

A strong trigger for higher levels in afternoon trade was European Central Bank President Jean-Claude Trichet who said the ECB "has decided to suspend rating requirement for Portugal".

Benchmark copper on the London Metal Exchange was trading at $9,710 a tonne by 1430 GMT from $9,521 a tonne at the close on Wednesday. The metal used in widely in power and construction earlier hit $9,720 a tonne, its highest since April 12.

US private employers added far more jobs than expected in June, bouncing back from a surprise slump the month before.

"The market is in a risk-on mode," said Nick Moore, global head of commodity strategy at RBS Global Banking and Markets.

"(There are) expectations that the Chinese will come back to the market, they can't keep drawing down inventories Trichet's comments on the ECB not applying rating agency numbers too closely gave a bit of breath to the EU situation."

Financial and commodity markets have come under pressure in recent days from the Greek crisis and rating agency downgrades of the country's sovereign debt.

Trichet's comments also helped the euro to pare losses against the dollar, which when is falls makes metals priced in the US currency cheaper for holders of other currencies.

Support was also gleaned from strike-related disruptions at some of the world's biggest copper mines and worries about a deficit of copper in the second half of the year.

"We see further upside in copper prices despite the recent rally," Goldman Sachs said in a note.

"We expect demand growth will be sufficient to substantially tighten the copper market over the next year, especially as Chinese buyers continue to return to the market."

Inventories of copper in LME-approved warehouse at 461,950 tonne, the lowest since April 21. They are down more than 3 percent since a peak on June 9.

Copper stocks have also fallen in recent weeks in Asian warehouses underlining that a pick up in demand may be underway.

Inventories of zinc in LME-registered warehouses hit their highest in 16 years at 871,050 tonnes.

"The problem with zinc is that it is a badly over supplied market," said Daniel Smith, an analyst at Standard Chartered.

"Demand is not subdued but the producers have not been disciplined."

Zinc, used to galvanize steel was at $2,400 a tonne from $2,380 Wednesday's close.

Battery material lead was at $2,725 from $2,700. Earlier, it is touched a peak of $2,730 a tonne, it’s highest since mid-April.

Positive fundamentals are supporting the metal."The long-term perspective is very positive for lead," Nic Brown, head of commodity research at Natixis said."We may see an increase in demand for lead for batteries for new cars and replacement batteries."

Tin was at $27,400 a tonne from $26,745 and aluminium at $2,592 from $2,556.

Read Comments