Positive IMF report boosts copper and tin

The current era of higher prices and scarcity in base metals such as copper and tin could “continue for some time”， the International Monetary Fund said on Wednesday in an upbeat look at commodities.

The warning came as the price of tin hit a fresh all-time high, up nearly 60 per cent since January, copper rose to a two-year high and the cost of other metals such as nickel rose on the London Metal Exchange.

Although the IMF was bullish across all commodities in its “World Economic Outlook” biannual report, it specifically highlighted base metals. “The medium-term balance of risks for prices should?.?.?.?remain tilted toward the upside, particularly for copper.”

The organisation said there had been “few convincing signs of a persistent increase in the growth of metal supply”。 Therefore, it added, “this would mean that, if demand continues to grow at the rates observed over the past decade, the current era of higher scarcity, rising metal price trends, and a balance of price risks tilted toward the upside may continue for some time”。

On the LME, tin for delivery in three months jumped to a record high of $26,790 a tonne, up 3.1 per cent. It later pared gains to trade at $26,300 a tonne.

Copper rose to $8,326 a tonne, the highest since July 2008. The fresh price highs provide a bullish backdrop to the metals industry’s annual gathering in London next week.

The IMF said that the near-term outlook was “benign” given global cyclical conditions, but added: “Commodity prices are projected to remain high by historical standards over the medium term, with risks tilted to the upside.”

The commodities market pays attention to the IMF’s views as the Washington-based organisation has accurately predicted some recent price movements. In particular, it was among the few official institutions to bet that the downturn was a mere pause in the “commodities super-cycle”， rather than its end.

“The upward shift in commodity demand growth that started some 10 years ago is expected to be sustained as global growth continues to be driven by emerging and developing economies,” it said.

“A sustained upward shift in commodity demand can lead to long periods of trend increases in real commodity prices because of sluggish supply responses, given long lags for exploration and investment.”

Elsewhere in commodities markets on Wednesday, oil prices gained as the US dollar weakened against the euro and other currencies.

In late trading, Nymex November West Texas Intermediate rose 41 cents to $83.23 a barrel. ICE November Brent rose 22 cents to $85.06 a barrel, having earlier touched a five-month high of $85.88.

The dollar’s fall also buoyed precious metals. Gold hit yet another nominal record nominal record at $1,349.80 a troy ounce, its seventh in eight trading days.

Traders said the yellow metal had been bid higher by miners buying back hedges, a sign of their confidence that current record prices are here to stay.

AngloGold Ashanti said last month it would accelerate the winding up of its hedge book.

Among the other precious metals, palladium hit a nine-year high, rising 2.6 per cent to $591.50 an ounce.