Upbeat U.S. home sales, manufacturing data lift sentiment
Copper (HG-FT) steadied just above $7,000 (U.S.) a tonne on Wednesday after earlier hitting 14-month highs on upbeat Chinese and U.S. data and as fears eased about Dubai's debt problems.
Copper for three-months delivery on the London Metal Exchange traded at $7,065 a tonne at 1054 GMT from a close of $7,075 on Tuesday.
“Chasing risk appetite again is back on the agenda, as some of those concerns about Dubai have now receded,” said Robin Bhar, an analyst at Calyon.
“We're seeing a bit of a relief rally because the world has not come to an end, because this domino threat from Dubai hasn't yet materialized and does not pose as much of a threat to the global recovery as Lehman Brothers did last year.”
The metal used in power and construction hit a day's high of $7,122, its loftiest since late September 2008, as investors returned to the market after taking fright last week when news emerged of Dubai World's debt problems.
Copper prices have risen more than 130 per cent this year, on course for their biggest annual increase since at least 1978, but remain some way off a record peak of $8,940 struck in July last year before the collapse of global markets in the fourth quarter.
Data Boost
Analysts added that sentiment received support from data from the day before showing China's economy was ending the year on a strong note, laying the foundations for solid expansion in 2010 from the world's top copper consumer.
From the United States, data showed a ninth straight month of growth in pending home sales, and a fourth month of expansion in the manufacturing sector.
The auto sector also offered glimpses of recovery, with an 8.8 per cent rise in November sales.
Prices are continuing to climb despite demand from China cooling off and stocks of copper at LME warehouses continuing to plow higher. Stocks last rose 2,000 tonnes to 443,000 tonnes, their highest level since late April.
“Regardless of easing imports from China and slackening physical demand, sentiment remains upbeat for base metals, “ said Andrey Kryuchenkov, an analyst at VTB Capital.
“Investor interest has yet to dry up, and funds are still playing on higher prices next year with persistent weakness in the dollar and amid a continuous flow of improving macro data.”
Aluminum (AL-FT) , used in transport and packaging, was at $2,125 from $2,103.
Aluminum inventories fell 3,800 tonnes, but were still near record highs in the region of 4.6 million tonnes.
Option expiry takes place on Wednesday. There are more than 18,000 outstanding contracts to buy – far outweighing those to sell – around 450,000 tonnes of aluminum at prices between $2,000 and $2,150 a tonne.
Zinc was at $2,393 from $2,372 and battery material lead was at $2,474 from $2,468.
Tin traded at $15,225 from $15,200 and nickel was at $16,536 from $16,295.
