Copper climbed to 27-month highs in London and New York as demand prospects improved and as the dollar declined. Lead gained to the highest level in six months.
Three-month copper on the London Metal Exchange rose as much as 0.8 percent to $8,415 a metric ton, the highest level since July 2008, and was at $8,389.25 at 3:19 p.m. in Singapore. The December-delivery contract on the Comex in New York gained as much as 1.3 percent to $3.8385 a pound, also the highest price since July 2008.
Chile’s Codelco, the world’s biggest copper producer, expects a “tighter” market next year because of demand from China and a lack of new supply, Chief Executive Officer Diego Hernandez said yesterday.
“There’s no stopping the bullishness in the market right now and there’s this frantic buying into commodities as the dollar continues to weaken,” Huang Wei, an analyst at Jicheng Futures Co., said from Guangdong. “The fundamentals are definitely improving, especially for copper. However, they aren’t so good as to justify the current prices.”
January-delivery copper on the Shanghai Futures Exchange gained as much as 1.8 percent to 63,350 yuan （$9,501） a ton. China is the world’s largest metals user.
The metal in London has risen 9.7 percent in the past month as the dollar tumbled 5.8 percent against a six-currency basket on increasing speculation the Federal Reserve will take further measures to protect the economic recovery. Copper inventories monitored by the LME, down 26 percent this year, are at their lowest level in a year.
Fed Minutes
In the minutes of their September meeting, Fed policy makers said they were prepared to ease monetary policy “before long” and focused on purchases of Treasury securities and boosting inflation expectations. The minutes of the meeting were released yesterday.
“The market is quite tight and next year it should continue to be tight,” Hernandez said in an interview. China “has kept quite firm demand,” he said.
On the supply side, a deterioration of the quality of ore and lack of investments in mines, exacerbated by the financial crisis in 2008, will keep prices at current levels “for a while,” said Hernandez. The long-term price of copper may be about $2.30 a pound, he said.
Copper prices may average more than $8,000 a ton in the fourth quarter of this year, 10 percent higher than the $7,266.78 average in the third quarter, according to a state purchasing agency in South Korea, Asia’s third-biggest base metals buyer.
“Despite a fast pace in the global economic recovery this year, supply growth for copper seems to have been very slow,” Lee said. “The metal is likely to advance to higher levels on slowing supply growth amid excessive liquidity in global markets.”
China’s Imports
China’s copper imports dropped for the first time in three months to 368,410 tons in September from 379,527 tons in August, as lower domestic prices reduced the appeal of overseas purchases. The country also imported 410,000 tons of scrap copper, up 2.5 percent from 400,000 tons in August, the General Administration of Customs said on its website today.
Higher scrap imports and the shutting of a smelter in India helped to reduce the demand for refined metal and ease the supply shortage in the concentrates market, according to Shenzhen Rongtuo Trading Co. Concentrate is semi-processed ore.
This led to a jump in processing fees, paid by miners to smelters to turn ore into refined metal, to as high as $80 a ton for smelting and 8 cents a pound for refining, up from about $20 to $30 a ton a month ago, said China International Futures （Shanghai） Co. analyst Fang Junfeng.
Zinc in London rose as much as 1.3 percent to $2,399.75 a ton, and lead gained as much as 1.2 percent to $2,403.50 a ton, both the highest levels since April. Nickel climbed 1.4 percent to $24,385 a ton, aluminum was little changed at $2,434.75 a ton, while tin dropped 0.8 percent to $26,300 a ton.
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