BS; Copper Rises to Three-Week High in New York as Dollar Weakens
By Chanyaporn Chanjaroen
Feb. 16 (Bloomberg) -- Copper rose in New York and London to the highest price in almost three weeks as a weaker dollar fueled demand for metals as an alternative investment.
The U.S. Dollar Index, a six-currency gauge of the greenback’s strength, dropped as much as 0.5 percent. Raw materials from oil to soybeans gained, and shares climbed. The correlation between industrial metals and the dollar has become increasingly negative, according to Dan Smith, an analyst at Standard Chartered Bank in London.
“Sentiment from the equities and foreign-exchange markets affected copper,” Smith said today by phone. Price movements on the London Metal Exchange reflect investors’ view of macroeconomic issues rather than fundamentals for raw materials, he said.
Copper for May delivery rose 7.55 cents, or 2.4 percent, to $3.1775 a pound at 8:26 a.m. on the New York Mercantile Exchange’s Comex unit. The contract advanced as high as $3.199, the highest intraday price since Jan. 28. Copper for three-month delivery gained 1.7 percent to $6,984 a metric ton in London.
All of the six main metals traded on the LME gained, lifting nickel to the highest level since August. Copper producer Vedanta Resources Plc paced gains in the 15-company FTSE 350 Mining Index, which rose as much as 2.8 percent.
Greek Deficit
The dollar index has advanced 2.9 percent in 2010, rebounding from last year’s drop as the euro slid on concern about sovereign debts and budget deficits in Europe. European finance ministers are prepared to impose deeper deficit cuts on Greece by March 16 as they met today in Brussels.
Copper has lost 5.6 percent this year on the LME after more than doubling in 2009. Metals climbed today as traders and investors returned to higher-risk assets after becoming “less pessimistic” about Greece’s budgetary woes, said Michael Widmer, a strategist at Bank of America-Merrill Lynch in London.
“Declines in metals this year are not really driven by metals fundamentals, but a broader macroeconomic environment,” he said today by phone. An increase this year in bookings to remove metals from warehouses registered with the LME signals demand from manufacturers, Widmer said.
Aluminum stockpiles earmarked for withdrawal, or canceled warrants, today jumped 8 percent to 295,175 tons, according to a daily LME report. That was the highest since at least 1997, when Bloomberg records began. Canceled warrants for nickel have surged more than sevenfold this year to 5,460 tons.
Nickel Climbs
Copper inventories monitored by the LME added 0.1 percent to 549,900 tons today, the highest since October 2003. Including inventories monitored by the Shanghai Futures Exchange and Comex, they total 761,837 tons.
Nickel for three-month delivery rose as high as $19,875 a ton, the highest since Aug. 24, on the LME and was last up 2.3 percent at $19,790 a ton. Stainless-steel mills, the biggest users of the metal, are restarting in Europe, Widmer said. Stockpiles monitored by the LME dropped 0.1 percent to 164,856 tons, the third consecutive decline.
Aluminum increased 1.3 percent to $2,080 a ton and lead added 1.8 percent to $2,220. Zinc gained 1.6 percent to $2,236 a ton and tin advanced 0.3 percent to $16,550 a ton.
Comex floor trading was shut yesterday for the Presidents Day holiday.
--Editors: Dan Weeks, Alastair Reed.
To contact the reporter on this story: Chanyaporn Chanjaroen in London at +44-20-7073-3544 or cchanjaroen@bloomberg.net
To contact the editor responsible for this story: Stuart Wallace at +44-20-7673-2388 or swallace6@bloomberg.net
