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Zinc gains, Copper Rises on Chinese Manufacturing, Slumping Dollar; Aluminum Advances
By Maria Kolesnikova - Nov 1, 2010 4:39 AM PT

Copper rose in London as manufacturing accelerated in China, the world’s biggest consumer of the metal.

A purchasing managers’ index released by China’s logistics federation gained to 54.7 from 53.8 in September, and a second gauge published by HSBC Holdings Plc and Markit Economics jumped to 54.8 from 52.9. Prices also climbed as the dollar weakened and Asian stocks advanced. Raw materials from rice to crude oil rose.

“Commodity prices are supported by good economic data from China, firm equity markets in Asia and the weaker dollar,” said Daniel Briesemann, an analyst at Commerzbank AG in Frankfurt.

Copper for delivery in three months climbed $115, or 1.4 percent, to $8,315 a metric ton at 11:26 a.m. on the London Metal Exchange. Copper for delivery in December added 1.3 percent to $3.7805 a pound on the Comex in New York. All of the six main metals traded on the LME gained, led by aluminum.

A weaker dollar fuels demand for commodities as an alternative investment and makes metals priced in the currency cheaper in terms of other monies. The U.S. Dollar Index, a six- currency gauge of the greenback’s strength, slid as much as 0.6 percent after falling for a second month in October. LME copper rose for a fourth month last month.

Fed Meeting

The U.S. currency slumped amid speculation that Federal Reserve officials may engage in another round of asset purchases, known as quantitative easing, in an effort to stoke the U.S. economy. Fed policy makers begin a two-day meeting tomorrow.

“With copper a leading risk asset, we expect price action to remain timid ahead of the Fed’s QE2 announcement and subsequently to trade in line with broader market sentiment,” Hussein Allidina, head of commodities research at Morgan Stanley in New York, said in a report today.

Hedge funds raised bullish bets on copper last week to the highest level since January, according to U.S. Commodity Futures Trading Commission data. Speculative long positions outnumbered short positions by 26,463 contracts on the Comex in the week ended Oct. 26. Net-long positions rose 1 percent from a week earlier.

Institute for Supply Management figures due today at 2 p.m. London time probably will show that manufacturing in the U.S. expanded at a slower pace in October, evidence of the cooling in the recovery that’s taken place since early 2010, economists said. The ISM’s manufacturing gauge slipped to 54 from 54.4, the median estimate in a Bloomberg News survey shows.

Construction Spending

Other reports may show consumer spending rose and construction spending fell. Construction accounts for about 25 percent of global copper demand, according to the Copper Development Association.

Copper also gained last week on speculation about a potential strike at Collahuasi, the world’s fourth-largest mine for the metal. Anglo American Plc and Xstrata Plc restarted wage talks with workers on Oct. 29. The mine is in Chile, the biggest copper-producing nation.

Tin for three-month delivery on the LME rose 1.2 percent to $25,900 a ton. Prices reached a record $27,338.50 on Oct. 14. The metal has jumped 53 percent this year, leading advances on the exchange, after production was disrupted in Indonesia and the Democratic Republic of the Congo.

Lead gained 1.6 percent to $2,487 a ton and nickel climbed 1.3 percent to $23,297 a ton. Aluminum rose 2 percent to $2,390 a ton and zinc added 1.9 percent to $2,470 a ton.

http://www.bloomberg.com/news/2010-11-01/copper-rises-as-chinese-manufacturing-speeds-up-dollar-slumps-zinc-gains.html