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Zinc slips, Copper Climbs, Advances Above $8,000 a Ton for the First Time Since April
By Anna Stablum - Sep 29, 2010 5:08 AM PT

Copper rose in New York and London, exceeding $8,000 a metric ton for the first time since April, as manufacturing sped up for a second month in China, the world’s largest user of the metal.

A purchasing managers’ index released today by HSBC Holdings Plc and Markit Economics gained to a five-month high of 52.9 from 51.9 in August. Copper climbed as high as $8,038 a ton, the highest intraday price since April 12, in London. Prices also advanced as the dollar weakened.

“I’m slightly surprised at the strength of the PMI,” said Nic Brown, an analyst at Natixis Commodity Markets Ltd. in London. “I’d thought we would have seen a bit more of a pause, given the impact of energy-efficiency measures on some parts of Chinese heavy industry.”

Copper for delivery in December rose 1.5 cents, or 0.4 percent, to $3.652 a pound at 7:57 a.m. on the Comex in New York. Copper for delivery in three months added 1 percent to $8,029 a ton on the London Metal Exchange.

The U.S. Dollar Index, a six-currency gauge of the greenback’s strength, fell as much as 0.5 percent to an eight- month low on speculation the Federal Reserve will add to monetary easing to bolster the slowing U.S. economy. A weaker dollar makes metals priced in the currency cheaper in terms of other monies.

U.S. Economy

Figures released yesterday showed cooling home prices and weaker consumer confidence in the U.S., the second-biggest copper user. Sales of new homes last month held at the second- lowest level on record, indicating housing remains depressed, data showed on Sept. 24. Construction accounts for a quarter of copper demand, according to the Copper Development Association.

“Any signs of weakness in the U.S., the U.K. and potentially Japan will be seen as an excuse to go for the next round of quantitative easing or currency intervention,” Brown said, referring to asset purchases by central banks.

A separate PMI for Chinese manufacturing that’s backed by the country’s government is scheduled for release on Oct. 1. The index, released by the National Bureau of Statistics and the Federation of Logistics and Purchasing, may rise to 52.5 from an August reading of 51.7, according to the median forecast of 15 economists surveyed by Bloomberg News.

“Just as Western authorities are going for more quantitative easing and competitive devaluation, we might just be surprised by the strength of global growth for the next quarter or so,” Brown said.

Inventories Shrink

European confidence in the economic outlook unexpectedly improved this month, the European Commission said today. An index of executive and consumer sentiment in the 16 euro nations rose to 103.2, the highest since January 2008, from a revised 102.3 in August.

LME copper stockpiles fell for a third day to 375,100 tons, the lowest level since Nov. 4, daily exchange figures showed. Inventories posted a 31st weekly drop in a row last week and have slid 25 percent this year, on course for the first annual contraction since 2004.

Orders to draw copper from inventories, or canceled warrants, slid for a sixth day, declining 5.3 percent to 22,075 tons.

Sterlite Industries (India) Ltd., the nation’s largest copper producer, received a court directive yesterday to shutter its only smelter as the government cracks down on factories breaching environment norms. The company is waiting for the full text of the order before deciding on a course of action, according to an e-mailed statement.

Tin for three-month delivery on the LME rose 1.3 percent to $24,301 a ton after touching $24,390, the highest intraday price since May 22, 2008. The metal is this year’s best LME performer, up 43 percent, beating the 25 percent advance by closest rival nickel. Production disruptions in Indonesia and the Democratic Republic of Congo have bolstered prices.

Nickel was unchanged at $23,175 a ton, while aluminum added 0.8 percent to $2,327 a ton. Lead advanced 0.6 percent to $2,295.25 a ton and zinc slipped 0.1 percent to $2,218 a ton.

To contact the reporter on the story: Anna Stablum in London at [e-mail].

To contact the editor responsible for this story: Claudia Carpenter at [e-mail].


http://www.bloomberg.com/news/2010-09-29/copper-climbs-in-london-exceeding-8-000-a-ton-for-first-time-since-april.html