LONDON, Nov. 16 -- Copper prices rose as the dollar resumed a slump, fueling demand for the metal as an alternative investment.
The dollar dropped as much as 0.6 percent against a basket of six major currencies. On Nov. 11, the gauge dropped to a 15- month low. Earlier today, copper fell as much as 0.5 percent as the greenback fluctuated.
"We are expecting a weaker dollar" in the short term, said Mark Heyhoe, an analyst at Hanson Westhouse Ltd. analyst in London. Copper "will continue at these levels" and "could even go a bit higher before the new year," he said.
Copper futures for March delivery gained 2.65 cents, or 0.9 percent, to $2.9995 a pound on the Comex division of the New York Mercantile Exchange. The contract rose 0.8 percent this week.
Prices have more than doubled this year as China, the world's biggest metal user, boosted imports in the first half.
Rising inventories may be signaling slowing demand, said Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago.
Stockpiles monitored by the London Metal Exchange rose for the ninth straight session to 403,625 metric tons, the highest level since April 30. Supplies tallied by the Shanghai Futures Exchange gained for a third week to 104,939 tons, the highest level since April 2004.
"With a continued build in inventories, it will start to put a cap on prices," McGhee said. "There's some concern about China's demand."
China's imports will fall by more than half in 2010 because stockpiles are ample, Beijing Antaike Information Development Co. said today.
"Not all of the metal China has imported during the past few months was consumed," Michael Widmer, an analyst at Bank of America Securities-Merrill Lynch, said in a report. Local reported and unreported inventories have risen by 700,000 tons this year, Widmer said.
"The country's metal imports may not be as strong in 2010 as they were through most of this year," he said. Still, demand probably will benefit from stimulus programs in industrial nations, Widmer said.
Copper for delivery in three months rose 0.3 percent to $6,520 a ton ($2.96 a pound) on the LME.
Lead, zinc and tin prices also climbed in London. Nickel and aluminum dropped.