Copper advanced in thin trade on Thursday as upbeat economic data from the United States raised hopes about the outlook for growth in the world's largest economy and demand for metals, with a weak dollar helping cement gains. Three-month copper on the London Metal Exchange ended at $7,540 a tonne, up more than 1 percent from a last bid of $7,450 on Wednesday.
Confidence was boosted by separate pieces of data showing new US claims for unemployment benefits dropped last week to their lowest in more than 3-1/2 years, while consumer confidence jumped in December to its highest level in six months. "The market is pushing through with a relief rally towards the year-end. We are bullish on the very short-term and believe copper could test $8,000 a tonne by the end of the year or early next year," said Gianclaudio Torlizzi of metals consultancy T-Commodity.
Copper is on track to close down by 25 percent this year, having shed almost five percent so far this month, weighed down by prospects for slowing global growth and uncertainty over the outlook for next year. Analysts also said the positive effects of a successful European Central Bank funding operation in the previous session were fading fast.
The number of outstanding copper futures contracts on the LME has fallen this week, as positions are closed out ahead of year end. "In recent days the base metals have been edging higher and we think that is due to short-covering as traders square up their books ahead of the holidays," said FastMarkets in a note.
A queue for metal is building in the Dutch port of Vlissingen, with a second day of large cancellations of aluminium warrants, the latest LME data showed. Of 907,700 tonnes of aluminium stored in LME sheds, warrants on 500,000 tonnes have been cancelled and are to be drawn out of warehouses.
With a minimum LME daily load out rate of 1,500 tonnes per day, rising to 3,000 tonnes when the LME introduces new rules from April, any business wishing to take out metal may have to wait until late July for delivery. LME aluminium ended at $2,018 a tonne from a last bid of $1,994 on Wednesday, while tin was untraded at the close, but bid at $19,200, flat from Wednesday's close.
The Indonesia Commodity & Derivative Exchange's soon-to-be launched physical tin contract will go ahead as planned, despite in-fighting at the smelter association which is supposed to provide material for the contract, an official said on Thursday. Zinc, used in galvanising, ended at $1,850 from $1,851, battery material lead closed at $2,000 from $1,967 while nickel ended at $18,695 from $18,975.