Copper bounces to three-week high
Rebekah Curtis
Friday, May 29, 2009
LONDON — Copper rose to a three-week high on Friday as the U.S. dollar fell and as reassuring data from Japan and the United States supported a potential pick-up in demand.
Copper for three-months delivery on the London Metal Exchange traded at $4,765 a tonne at 0923 GMT, versus $4,755 on Thursday.
The metal used in power and construction hit a day's high of $4,790. Up nearly 8 per cent in May, copper is heading for its fifth consecutive month of gains.
Boosting sentiment, the U.S. Commerce Department reported new orders for durable goods rose 1.9 per cent from March, the biggest percentage advance since December 2007.
Comforting U.S. homes and jobs data also soothed investors.
“Things are getting worse at a slower rate,” said Charles Kernot, a mining analyst at Evolution Securities. “Out there people are looking at things positively,” he said, adding that a weaker dollar was also aiding industrial metals.
A weaker U.S. currency makes metals priced in dollars cheaper for holders of other currencies.
Equities also rallied.
Sentiment also rose after Japan's industrial output jumped 5.2 per cent in April, much more than expected and the second straight month of increase, as companies continue to restock after a heavy run-down of inventories.
Stocks data was also supportive, with inventories of copper at LME warehouses falling 4,850 tonnes to 312,275 tonnes.
Chinese buying has helped copper more than double in value so far this year, but analysts say demand is starting to subside as the world's biggest consumer eases off a restocking process.
Cancelled warrants – material earmarked for delivery – stood at 38,825 from 43,650.
“The continued drawdown in LME inventories is encouraging but there are some concerns it's stockpiling going on in China, said Marc Elliott, an analyst at Fairfax.
Aluminum stood at $1,416 from $1,412. Aluminum stocks continued a seemingly relentless rise, up by 5,125 tonnes to a record above 4.2 million tonnes. The metal used in transport and packaging has been hammered as economic turmoil has ravaged the autos sector.
Battery material lead traded at $1,505 from $1,478. Tin traded at $13,850 from $13,650. Lead and tin supply worries remain as latest data shows a dominant position controlling between 50 and 80 per cent of cash warrants on LME stocks.
Zinc was at $1,508 from $1,475. Steel making ingredient nickel continued its flirtation with resistance towards $14,000, trading at $13,710 from $13,500.
A series of data due on Friday will also be scrutinised, including preliminary first-quarter GDP figures for the United States.
“We are getting some better numbers and the currency markets are supporting metals prices,” ANZ's senior commodities analyst Mark Pervan said.
“We may now be looking at a W-shaped recovery. We are in the first V, and another is to come though. I don't think it will be as steep as the first. You'll be hard pressed to see things back to the December lows.”
Copper May 29,09:45
Bid/Ask 2.1742 - 2.1788
Change +0.0520 +2.45%
Low/High 2.1222 - 2.1788
DOW +10pts
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