Copper rose to a record in London as car sales sped up in China, the world’s biggest consumer, and the introduction of an exchange-traded fund backed by the metal drew closer.
Passenger-car sales to dealerships rose 29.3 percent from a year earlier in November, the China Association of Automobile Manufacturers said today. ETF Securities Ltd. said Dec. 7 funds backed by copper, nickel and tin will start trading in London tomorrow. Prices also climbed as copper inventories tracked by the London Metal Exchange shrank further.
“It seems more than a coincidence that copper, nickel and tin are doing well after the ETF Securities announcement, outperforming zinc in particular,” said David Thurtell, an analyst at Citigroup Inc. in London. The Chinese car-sales figures and the drop in stockpiles also helped prices, he said.
Copper for three-month delivery added as much as $76, or 0.8 percent, to $9,091 a metric ton on the LME and was at $9,047.50 at noon local time. The metal is up 23 percent this year. Copper for March delivery gained 0.7 percent to $4.131 a pound on the Comex in New York after touching $4.1545, the highest price since May 2008.
“As friendly as I am to copper, I would suggest some caution ahead of Chinese imports data due for release tonight,” Thurtell said. “Despite scrap shortages, refined imports in November could easily show another significant fall as the Chinese market reacts to high prices and an unfavorable arbitrage.”
One-Year Low
Shipments of copper and products into China slid for a second month to the lowest level in a year in October, figures showed on Nov. 10.
China’s total vehicle sales rose 26.9 percent to 1.7 million units in November. A typical U.S.-built car contains more than 50 pounds of copper, and an average luxury model has about a mile of wiring made of the metal, according to the Copper Development Association.
Expectations that interest rates may rise as soon as this weekend in China intensified this week as the government brought forward the release of November economic figures to Dec. 11. Authorities are moving to limit inflation that reached a two- year high in October.
ETF Securities plans to introduce other funds backed by aluminum, lead and zinc next year. JPMorgan Chase & Co. and BlackRock Inc. have also announced plans to start ETFs holding industrial metals. Credit Suisse Group AG is seeking to list an exchange-traded product backed by aluminum in London, according to a person familiar with the draft prospectus.
Smaller Stockpiles
LME copper inventories have shrunk 30 percent this year, on course for the first annual contraction since 2004, and are at the lowest level since October 2009. Today they slipped to 349,450 tons.
“Fresh estimates suggest stockpiles in LME warehouses may drop to an all time low of less than one week’s usage,” John Meyer, an analyst at Fairfax IS, said in a report.
Immediate-delivery LME copper’s premium to three-month metal yesterday rose 6.6 percent to $32.25 a ton. Prices moved on Nov. 8 to a so-called backwardation, when nearby metal trades above longer-term contracts, potentially signaling supply concern.
Tin for three-month delivery on the LME was unchanged at $25,600 a ton. Prices reached a record $27,500 on Nov. 9. The metal has jumped 51 percent this year, leading advances on the exchange, after production was disrupted in Indonesia and the Democratic Republic of Congo.
Aluminum, Lead
“The tin market is already tightening further,” Commerzbank AG said in a report today. “There is no end in sight to the problems with Indonesia’s tin production. Consequently, tin prices should remain well supported.”
Aluminum rose 0.3 percent to $2,381 a ton. The fee to borrow metal for next-day delivery, the so-called tom-next spread, rose to a premium of as much as $4.50 today, compared with a closing discount of $5 yesterday. It was last at $2. An increase in the fee, which reached a $9 premium yesterday, usually indicates tightening supply.
BHP Billiton Ltd. workers in South Africa began a strike for higher pay yesterday at the company’s largest aluminum smelter. The company said today the strike is continuing and its Wessels mine remains suspended with no production.
Nickel climbed 0.2 percent to $24,048 a ton, lead was unchanged at $2,405 a ton and zinc fell 1.4 percent to $2,279.50 a ton.
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