BLBG: Copper Heads for Biggest Gain in More Than 3 Months on Dollar
By Anna Stablum
Oct. 23 (Bloomberg) -- Copper rose in New York and London, heading for its biggest weekly gain in more than three months as the dollar declined for a third straight week, spurring demand for commodities as an alternative investment.
The Dollar Index, a gauge of value against six currencies, has lost 0.5 percent this week and slid on Oct. 21 to the lowest in more than a year. The depreciation makes metals denominated in the dollar cheaper for holders of other currencies. Copper has also gained on concern labor strikes in South American and reduced output at a BHP Billiton Ltd. mine will curb supply.
“Copper is benefiting from a number of factors,” David Thurtell, an analyst at Citigroup Inc. in London, said by phone. “Chief among these are the weaker dollar, strong demand from China and, more recently, concerns over short-term supply due to copper mine strikes in Chile and the BHP Olympic Dam problems.”
Copper for delivery in December rose 5.05 cents, or 1.7 percent, to $3.0485 a pound by 8:40 a.m. on the New York Mercantile Exchange’s Comex unit. The contract is set for a 7.3 percent weekly gain, the biggest since the week ended July 17.
Copper for three-month delivery added 1.5 percent to $6,691 a metric ton on the London Metal Exchange. It rose as high as $6,699, the highest price since Sept. 29, 2008.
In Germany, the third-largest consumer of the metal, business confidence rose to a 13-month high in October, improving the outlook for growth in Europe’s largest economy. Europe’s manufacturing expanded for the first time in 17 months, with an index rising to 50.7 this month from 49.3 in September, London-based Markit Economics said today.
China Growth
Record first-half imports into China, the biggest copper consumer, and a weaker dollar helped double the value of the metal this year. The Chinese economy, the world’s third-largest, grew 8.9 percent in the third quarter from a year earlier, the government said yesterday.
“China is still on an impressive track of overshooting its official 8 percent growth target,” Andrey Kryuchenkov, an analyst at VTB Capital in London, wrote in a report today. “In the longer run, it is certainly positive for most metals and signals that serious restocking from China could be around the corner.”
A strike at BHP’s Spence copper mine in Chile entered its 11th day today. Workers and officials from the world’s largest mining company failed to reach an agreement, and negotiations will continue today, according to union leader Andres Ramirez. The mine accounts for 1 percent of global copper production, according to Macquarie Bank Ltd.
Strike Continues
Full production at its Olympic Dam mine in Australia will only resume by the end of March after repairs to a damaged shaft, BHP said on Oct. 21. Until then, ore hoisting will be at about 25 percent of capacity, the company said.
In Asia, an improvement in demand from last year may lift annual copper cathode fees for 2010 by as much as 23 percent, Pan Pacific Copper Co. said. The premium charged by producers probably will rise by $10 to $15 a ton, company executive Yoshihiro Nishiyama said yesterday.
The benchmark copper premium imposed by Chile’s Codelco, the world’s largest copper producer, was $65 a ton this year for Japanese customers, $64 in South Korea and $72 to $75 for China.
Inventories of copper in LME-monitored warehouses climbed 0.8 percent to 367,075 tons, according to daily exchange figures. In Shanghai, stockpiles fell 4.2 percent to 95,976 tons, the Shanghai Futures Exchange said.
Zinc Gains
Among other LME metals for three-month delivery, zinc rose 1.8 percent to $2,289.50 a ton after climbing as high as $2,297.50, the highest since May 20 last year. Workers are also on strike in Peru, the second-largest producer of the metal used mostly to rust-proof steel.
Aluminum rose 1.1 percent to $1,988 a ton after advancing as high as $2,000, the highest intraday price since Aug. 19. Demand from China, the biggest consumer, is up 2.5 percent from a year ago in 2009, according to Jorge Vazquez, an analyst at Laredo, Texas-based researcher Harbor Intelligence.
Improved demand will push prices above $2,100 a ton and as high as $2,400 by the end of the year, Vazquez said yesterday by e-mail. China represented 41 percent of global aluminum demand in September, he said.
Tin gained 2 percent to $15,294 a ton after reaching $15,600, the highest intraday price since June 12. Lead advanced 1.5 percent to $2,440 a ton, and nickel rose 1.7 percent to $19,474 a ton.
