copper sees new 2 wk high

Monday July 2, 8:44 PM
Copper sees new 2-wk high, lead hits new record high
By Pratima Desai

LONDON, July 2 (Reuters) - Copper prices rose to fresh two-week highs on Monday as a weaker dollar, threats to supply and falling stocks boosted confidence.

Lead also hit a new record high and nickel bounced.

ADVERTISEMENT


Copper for three-month delivery on the London Metal Exchange touched $7,689 a tonne, the highest since June 18. It was untraded in official rings, but bid at $7,625, up from $7,560 at the close on Friday.

"Copper looks quite strong. The dollar is...helpful for base metals, we haven't got any further on the strike situation and stocks are continuing to decline," said Stephen Briggs, analyst at SGCIB.

The dollar at around $1.3600 per euro is at its lowest since May 16. Against sterling the dollar hit a 2-1/2-month low.

Stocks of copper in LME warehouses fell 2,100 tonnes to 112,600 tonnes, the lowest since last October.

"The reality is that the market is beginning to respond to this appearance of supply tightness," JP Morgan said in a note.

A tighter market is reflected in the premium at around $127 a tonne -- the highest since last June -- for material now compared with delivery in three months.

On the strike front, latest developments include news that Chile's Collahuasi, one of the world's largest copper mines, requested government mediation on Friday to try to avoid a strike by 698 workers. [ID:nN29386486]

FAVOURITES

Base metal price gains helped London-listed miners recover from early losses. Xstrata , BHP Billiton , Kazakhmys , Rio Tinto and Anglo American were all up despite a sombre mood on equity markets.

However, sentiment could turn after the release of U.S. manufacturing data later on Monday, which will be watched for clues to the health of the economy and the likely direction of interest rates and the dollar.

But traders say even if the numbers disappoint, nickel could bounce higher as prices have collapsed around 30 percent since hitting a record high of $51,800 on May 9.

Nickel traded up at $36,950 a tonne from $36,200 on Friday, when it hit a four-month low of $35,350 as the market priced in stainless steel production cuts in China.

"Nickel remains our favourite industrial metal exposure during 2007 due to the persistence of market deficits to the end of 2008," Deutsche Bank said in a research note.

Lead traded at a new all-time high of $2,760 a tonne. Prices are up around 70 percent since the start of this year. It traded at $2,725 in official rings from $2,658 on Friday.

Gains have been fuelled by the closure of the Magellan mine in Western Australia, owned by Canada's Ivernia .

Supply fears were reinforced earlier this month by news that China exported less refined lead in May. Aluminium firmed to $2,742 a tonne from $2,728 on Friday. Traders expect the option expiry on Wednesday to pass quietly as the number of outstanding contracts to buy or sell the metal around current prices is not significantly large.

Many expect aluminium to trade within its established $2,500 to $2,900 range for the foreseeable future.

Some analysts expect world demand for aluminium to grow at around nine percent this year, but they think that increase is likely to be more than matched by rising output."

Zinc was at $3,406 a tonne from $3,355 and tin
was at $13,900/14,000 from Friday's last bid at $13,850.