Copper prices rose to fresh seven-week highs on Monday as a weaker dollar, threats to supply and falling stocks boosted confidence. Lead hit a new all-time record as fund buying persistently pushed the metal higher, rising over 70 percent this year.
Copper for delivery in three months on the London Metal Exchange touched $7,725 a tonne, the highest since May 16. It closed at $7,710, up 2.0 percent from $7,560 at the close on Friday.
In New York, copper for September delivery closed up 7.65 cents, or 2.2 percent, to $3.5270 a lb on the New York Mercantile Exchange's COMEX division, its highest settlement since May 11. "Copper looks quite strong. The dollar is ... helpful for base metals, we haven't got any further on the strike situation and stocks are continuing to decline," said Stephen Briggs, analyst at Societe Generale Corporate and Investment Banking.
The dollar hit $1.3636 per euro, its lowest since May 1. Against sterling the dollar hit a 26-year low. Stocks of copper in LME warehouses fell 2,100 tonnes to 112,600 tonnes, the lowest since last October. "The reality is that the market is beginning to respond to this appearance of supply tightness," J.P. Morgan said in a note.
A tighter market is reflected in the premium at around $127 a tonne - the highest since last June - for material now compared with delivery in three months. On the strike front, latest developments include news that Chile's Collahuasi, one of the world's largest copper mines, requested government mediation on Friday to try to avoid a strike by 698 workers. Base metal price gains and merger talk helped London-listed miners with Lonmin, BHP Billiton, Rio Tinto and Anglo American up over 2.5 percent and found among the ten top performers.
Sentiment was bolstered after US manufacturing data beat expectations, the index rose to 56.0 in June from 55.0 in May, hitting the highest since April 2006. "It is another indicator that metals demand in the US will bounce further, having underperformed at the beginning of the year," analyst Michael Widmer at Calyon said.
US copper demand was up by 2.6 percent in March year-on-year after falling by 21 percent in January and 7.6 percent in February. Lead closed at a new all-time high of $2,780, up $122 or 4.6 percent. Gains have been fuelled by delays in shipments from the Magellan mine in Western Australia, owned by Canada's Ivernia and accounting for 3 percent of the world's mined lead.
Supply fears were reinforced earlier this month by news that China exported less refined lead in May. Aluminium firmed to $2,757 from $2,728 and zinc was up 3.1 percent at $3,460 from $3,355.
During the next 18 months zinc had the greatest downside price potential due to a substantial supply-side response, Societe Generale said in a quarterly report. "We expect copper and nickel to decline too, but here prices should remain far above past norms since relatively little new capacity is due on stream," the report said.
Nickel fell $300 at the close to $35,900. On Friday it hit a four-month low of $35,350 as the market priced in stainless steel production cuts in China. Tin was last indicated at $13,875/13,900 from Friday's last bid at $13,850.