Copper Advances to 27-Month Highs in London, Shanghai, New York

Copper climbed to the highest levels in 27 months from London, New York and Shanghai as the dollar slumped and the outlook for demand improved. Zinc advanced to a six-month high and lead rose to a nine-month high.

Three-month copper on the London Metal Exchange gained as much as 1.5 percent to $8,485 a metric ton, the highest price since July 2008, and was at $8,478 at 1:49 p.m. in Singapore. The metal, used in construction and household appliances, jumped 11 percent in the past month as the dollar tumbled 5.7 percent against a basket of six major currencies.

The December-delivery contract on the Comex in New York rose as much as 1.2 percent to $3.866 a pound, and January- delivery copper on the Shanghai Futures Exchange added as much as 1.7 percent to 64,000 yuan （$9,618） a ton. Both levels are also the highest since July 2008.

“China’s trade data yesterday boosted sentiment greatly and together with the expectations of a weaker dollar from quantitative easing by the Federal Reserve, metals and other commodities affirmed their uptrend,” Liu Changliang, an analyst at Southchina Futures Co., said from Dalian.

China’s September exports were the second-highest on record at $145 billion, a customs report showed yesterday, alleviating concerns that a slowdown in the rest of the world will weigh on growth in the largest metals user. The country’s foreign- exchange reserves surged by a record to $2.65 trillion at the end of September, the People’s Bank of China said yesterday.

Beyond Fundamentals

“While demand is expected to remain robust, we’ve now moved beyond the fundamentals at current prices,” said Liu.

Copper is up 14 percent this year as global inventories dropped 26 percent to their lowest level in a year. Imports of the metal by China were at 368,410 tons in September, dropping 2.9 percent from the previous month, as higher prices prompted consumers to turn to scrap supplies instead. Scrap copper imports rose about 2.5 percent to 410,000 tons last month.

The dollar fell to an eight-month low versus the euro and approached a 15-year low against the yen before reports that economists forecast will show U.S. wholesale costs and consumer prices slowed, backing the case for the Federal Reserve to ease policy to safeguard the economic recovery.

This week, traders, consumers, producers and hedge-fund managers from Singapore to Santiago are gathered in London for the annual LME week, where they attend seminars and dinners and make deals on metals.

Metals Outlook

The world is entering “a generally strong period for all commodities,” and prices for copper, aluminum, zinc and nickel will all rise in the first quarter of next year, Fred Demler, head of global commodities at MF Global, said at a seminar in London yesterday. Copper prices will average $8,438 a ton next year, compared with an average of $7,344 a ton in 2010, he said. The metal has averaged $7,253 this year.

On the supply side, there are no “real whoppers” of new copper mines planned and copper-mine capacity growth will probably continue to “fall short,” according to BNP Paribas analyst Stephen Briggs. Global demand for industrial metals is expected to increase on average by 11 percent this year, and around 6 percent in 2011, he said.

Zinc in London rose as much as 0.8 percent to $2,430 a ton, the highest price since April, and lead gained as much as 0.6 percent to $2,450 a ton, the highest level since January. Aluminum climbed 1 percent to $2,441 a ton, nickel advanced 0.6 percent to $24,550 a ton and tin increased 0.7 percent to $26,950 a ton.