Gains in Shanghai, European and U.S. equities boost metals
Higher equity markets and an upbeat outlook on metals demand from global miner Rio Tinto Ltd/Plc gave a boost to industrial metals on Thursday, with copper rising over 3 per cent.
Copper (HG-FT278.052.000.72%) for three months delivery on the London Metal Exchange rose to $6,100 (U.S.) a tonne by 0903 GMT, versus $5,925 a tonne on Wednesday, when it dropped to a two-week low of $5,818 a tonne.
European shares climbed higher, tracking a sharp rebound in Chinese equities and overnight gains in Wall Street, which cheered after a surprising drop in crude oil stockpiles suggested an improved demand outlook.
“Commodities and equities have certainly been trading much closer recently,” said analyst Gayle Berry at Barclays Capital.
“What we saw interestingly yesterday was buying emerging, especially for copper once prices dipped below $6,000 – maybe there's not a huge amount of downside from here.”
Copper has gained nearly 40 per cent since early July as funds have poured money into the industrial metals, betting the worst is over in the global recession and the latter part of the year will see better metals demand.
“I think the market has become much more positive about the outlook for the metals demand in the second half of the year,” Ms. Berry said.
Adding to the positive sentiment, Rio Tinto, the world's second-largest miner, said it saw signs of recovery in China and it expected aluminum (AL-FT0.90----%) prices to rise in the second half of 2009.
But the miner still remained cautious about the recent rally in metals prices. “If current markets are any indication, I expect to see more stable and possibly stronger trading conditions in the second half,” chief executive Tom Albanese said.
Investors watch macro data closely to have a better picture of the health of the global economy.
Thursday's data looks fairly lean. Dominating the picture will be U.S. leading indicators for July, the Philadelphia Fed August business activity index and weekly U.S. jobless claims.
Aluminum rose $22 to $1,972, having lost 2.7 per cent on Wednesday, and dealers said a 52,525 tonne delivery to LME warehouses, driving stocks to a new record of 4.62 million tonnes, limited bullish appetite despite the threat of the market losing half a million tonnes of output from UC RUSAL.
The world's largest aluminum producer says it will expedite work on a new hydroelectric plant to limit output losses during the four years of repairs it expects will be needed at its main Siberian power supplier.
Tin rose more than 5 per cent to touch a high of $14,400 and was last at $14,100 a tonne versus $13,550 a tonne on Wednesday.
An estimated 11.2 per cent fall in Indonesian tin exports in July to 8,778 tonnes, helped support the market, though exports for the first seven months of the year from the world's second biggest producer of the metal stand at 59,354, a 5 per cent increase on the same period a year ago.
Other LME metals were also up, with nickel rising nearly 3 per cent to $19,349 versus $18,800 on Wednesday, while zinc was at $1,853 a tonne from $1,805 and lead was up at $1,865 from $1,815.
