Copper rose on Tuesday as the dollar fell and on signs demand could be improving in top metals consumer China and in the United States, but investors were cautious ahead of US elections and a Federal Reserve meeting. REUTERS Published: 2010/11/02 04:27:33 PM Copper rose on Tuesday as the dollar fell and on signs demand could be improving in top metals consumer China and in the United States, but investors were cautious ahead of US elections and a Federal Reserve meeting. Three-month copper on the London Metal Exchange traded at $8418 a tonne in official rings, versus a close of $8300 on Monday. A weaker dollar attracted non-U.S. investors. There is currently a marked negative correlation between movements in the US currency and dollar-priced commodities. Supporting the demand outlook for metals, a survey on Tuesday showed euro zone manufacturers boosted output in October at a faster pace than previously estimated. “All the planets have lined up for copper,” said David Thurtell, an analyst at Citi. “There have been some very encouraging numbers out in the last 24 hours,” he added. “The outlook is more favourable than it’s been for a couple of months in terms of very important forward indicators.” Data on Monday showed China’s official purchasing managers’ index rose to 54,7 in October from 53,8 in September, and that the pace of growth in the US manufacturing sector quickened unexpectedly in October. Investors eyed the US Federal Open Market Committee which on Tuesday begins a two-day meeting on interest rate policy in Washington. Investors anticipated the Fed would announce further quantitative easing of around $80 billion to $100 billion a month. The total liquidity injection is forecast between $250 billion and $2 trillion. “Monday’s rebound in the US ISM manufacturing index?should not prevent the Fed from announcing more quantitative easing on Wednesday,” Capital Economics said in a note. “But it makes it more likely that the package of asset purchases will not be larger than $500 billion. An even smaller package is possible.” In the meantime, investors eyed US Congressional elections due on Tuesday that would be important in terms of fiscal policy for the next two years. CHINA DEMAND Chinese state-run consultancy Antaike said the nation’s domestic copper shortage would rise to 2,44 million tonnes next year from 2,25 million this year. Total consumption of copper would rise 8% in 2011 — about 540000 tonnes — to 7,34 million tonnes, Antaike’s Yang Changhua said. Consumption was expected to rise 11,5% this year. Over the next five years China’s demand could rise to 8,5 million tonnes by 2015, a director at the Ministry of Industry and Information Technology said. Zhang Fengkui, at the Ministry’s nonferrous metals department, told a conference in Ningbo city that copper demand from the power, car and home appliance industries would continue to push up consumption in China. Aluminium traded at $2412,50 a tonne from $2372 a tonne. Zinc was at $2460 a tonne from $2499. Stocks of zinc at LME warehouses last rose by 4225 tonnes to 632225 tonnes, their highest since January 2005. Battery material lead was at $2495 a tonne from $2465 a tonne. LME lead inventories jumped 2725 tonnes to their highest in more than ten years, above 200000. Meanwhile, the latest LME data showed one entity held a significant 50-80% of LME lead warrants, tom and cash positions, and two entities held between 40-50% of tin warrant, tom and cash positions. Tin traded at $25900 a tonne from $25600 a tonne and nickel was at quoted at $23500/23525 a tonne from $23245 a tonne.

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