Copper Hits Two-Week High
Source: Reuters (12/1/10)
"The dollar weakening is still supportive to the complex."
Three-month copper on the London Metal Exchange traded at $8,499/ton in rings, extending gains made on Tuesday, when it closed at $8,360. The metal used in power and construction earlier touched a session high of $8,537.75.
"The dollar weakening is still supportive to the complex," Standard Bank Analyst Leon Westgate said.
"The U.S. economic data was also pretty solid. . .the Chinese data was also pretty good."
Better-than-expected Chinese factory data in November, with the official Chinese Purchasing Managers' Index (PMI) rising to a seven-month high of 55.2, showed health in one of the world's largest economic engines, lifting sentiment. Data on Tuesday showed U.S. consumer confidence rose in November to its highest in five months and U.S. Midwest business activity grew faster than expected.
A looming deficit in the copper market is expected to push copper prices next year above the record high of $8,966 hit early November.
Bolstering this outlook, LME copper stocks have fallen steadily since February, last down 900 tons to 354,850 tons—their lowest since October 2009.
Investors also kept close tabs on a dominant position controlling 50%–80% of cash warrants for copper, subject to LME lending guidance.
In U.S. economic news that could impact metals via currency movements, the Institute for Supply Management releases its November manufacturing PMI at 1500 GMT.
In other news, China's arrivals of copper scrap should be low in November and December as importers cut spot bookings in the past two months on high prices, after the inflow fell a fifth in October, traders said on Wednesday.