Copper rose in London to the highest level in almost three weeks as inventories shrank the most since September and the premium for immediate-delivery metal climbed further, signaling steady demand.
Stockpiles tracked by the London Metal Exchange, on course for a 10th monthly drop, declined 0.7 percent to 352,425 metric tons, exchange figures showed today. Spot copper’s premium reached $66 a ton. Prices also advanced on a lingering strike at a Chilean mine and optimism that European officials will act to stem the region’s debt crisis, analysts said.
“Spreads are tight and LME stocks are falling,” said William O’Neill, a partner at Logic Advisors in Upper Saddle River, New Jersey. “In addition, the Collahuasi strike is not near settlement.”
Copper for delivery in three months climbed $120, or 1.4 percent, to $8,705 a ton at 10:09 a.m. on the LME. Prices reached $8,725, the highest level since Nov. 12. Copper for delivery in March added 0.7 percent to $3.9745 a pound on the Comex in New York. All of the six main metals traded on the LME gained, led by zinc.
Comex copper may reach $4.20 a pound “by early first quarter,” O’Neill said.
LME copper stockpiles are at the lowest level since Oct. 13, 2009. They’re down 30 percent this year, heading for the first annual contraction since 2004. Orders to draw metal from inventories, or canceled warrants, dropped 4.7 percent to 30,475 tons today.
LME Backwardation
Immediate-delivery copper traded on the LME moved on Nov. 8 to a premium to three-month metal, a so-called backwardation potentially indicating concern about near-term supply. Spot copper’s premium yesterday rose as high as $74 a ton before closing at $63.50.
Wage talks between company representatives and union leaders at Collahuasi, a venture of Anglo American Plc and Xstrata Plc, will extend into a fourth day in a bid to end a strike at the world’s third-biggest copper mine, a union leader said yesterday. The strike entered its 27th day yesterday, becoming the longest recorded at a major Chilean copper mine.
The European Central Bank is forecast to keep interest rates unchanged today, delaying its exit from emergency liquidity measures as the debt crisis threatens to engulf Spain, its fourth-largest economy, and Portugal. ECB policy makers will announce their decision at 12:45 p.m. London time and President Jean-Claude Trichet holds a press conference 45 minutes later.
Focus on ECB
Metals “are continuing higher today on the back of the apparent resolve of European authorities to find a solution to the challenges facing peripheral Europe,” said Daniel Brebner, an analyst at Deutsche Bank AG in London. “The big focus today will obviously be the ECB decision, but more importantly comments from Trichet.”
LME copper gained the most in almost two weeks yesterday as reports showed stronger manufacturing in China, the euro zone, the U.K. and the U.S.
“U.S. data was important as well and could continue to surprise on the upside near term,” Brebner said.
Metals also gained today as the U.S. Dollar Index, a six- currency gauge of the greenback’s strength, declined as much as 0.4 percent. A slumping dollar makes metals priced in the currency cheaper in terms of other monies and spurs demand for raw materials as an alternative investment.
Tin for three-month delivery on the LME rose 2.5 percent to $25,430 a ton. Prices reached a record $27,500 on Nov. 9. The metal has jumped 50 percent this year, leading advances on the exchange, after production was disrupted in Indonesia and the Democratic Republic of Congo.
Aluminum rose 1.7 percent to $2,380 a ton and nickel climbed 1.6 percent to $23,935 a ton. Lead gained 2.6 percent to $2,330 a ton and zinc added 3 percent to $2,225 a ton.
To contact the reporter on this story: Maria Kolesnikova in Moscow at mkolesnikova@bloomberg.net
To contact the editor responsible for this story: Claudia Carpenter at ccarpenter@bloomberg.net.
