Farallon Resources Ltd. (fka FRLIF)

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Lead rises, Copper Advances For First Time in Three Days in London on Dollar Weakness

By Bloomberg News - Aug 9, 2010 12:26 AM PT

Copper in London increased for the first time in three days as a weaker dollar boosted the appeal of the metal as an alternative asset.

The metal for three-month delivery gained as much as 1.2 percent to $7,461.25 a metric ton on the London Metal Exchange, and traded at $7,459 at 14:56 p.m. in Shanghai. It fell 1.8 percent in the past two trading sessions.

“As the U.S. dollar is obviously in a downward trend, investors are optimistic about the copper price outlook,” said Li Rong, an analyst at Dalu Futures Co.

The dollar traded near an eight-month low against the yen and a three-month low against the euro after a report last week showed U.S. employers cut more jobs than forecast in July. The dollar was at 85.65 yen as of 4:03 p.m. in Tokyo from 85.51 yen in New York on Aug. 6, when it reached 85.02 yen, the lowest since Nov. 27. The greenback traded at $1.3277 per euro from $1.3280, after touching $1.3334 on Aug. 6, a three-month low.

“Investors will also look at economic and trade data, but the importance is undermined by investment demand amid a flood of money,” Li said.

China will release its preliminary July trade data for copper and aluminum tomorrow, and base metals production figures on Aug. 11, along with the industrial output data.

Hedge-fund managers and other large speculators increased their net-long position in New York copper futures in the week ended Aug. 3, according to U.S. Commodity Futures Trading Commission data. Speculative long positions, or bets prices will rise, outnumbered short positions by 12,960 contracts, the commission said.

Shanghai Gains

Copper for November delivery in Shanghai increased by 0.8 percent to close at 58,280 yuan ($8,614) a ton.

China’s Ministry of Industry and Information Technology said excess capacity for 2,087 companies in 18 outdated industries, including steel, cement, nonferrous metals producers, should be shut by the end of September.

“The government has been talking about closing outdated capacity for years,” said Wang Zhouyi, an analyst with China International Futures (Shanghai) Co. “I don’t think it’s anything new, and it won’t move the market much. Besides, the affected capacity for copper is very small.”

China’s industrial output in July may have expanded at its slowest pace since August 2009, retreating from a 13.7 percent gain in June to 13.4 percent, according to economists surveyed by Bloomberg News.

Aluminum in London gained 1.1 percent to $2,214 a ton, zinc rose 1.7 percent to $2,165 a ton, and lead advanced 2.6 percent to $2,216 a ton. Nickel increased 1.4 percent to $22,400 a ton, and tin was little changed at $20,750 at 14:59 p.m. in Shanghai.

http://www.bloomberg.com/news/2010-08-09/copper-in-london-advances-for-first-time-in-three-days-on-dollar-weakness.html