Metals News
Copper Advances as Dubai Default Concerns Ease, Dollar Drops
smm insight
01:16PM
Dec 7,2009
Source:SMM

SINGAPORE, Dec. 1 -- Copper rose as concerns of a possible default by Dubai World eased, adding to optimism that the global economic recovery remains on track and putting the metal on course for the tenth gain in 11 months this year.

    The United Arab Emirates' central bank said yesterday it would back the country's lenders, driving the dollar lower as risk appetite increased. The metal, which paced a rally today in industrial metals, has risen 6.6 percent in November as the dollar fell for a fifth month against a basket of six currencies.

    "It's still too early to tell the full extent of the problem in Dubai," said Zeng Chao, an analyst at Everbright Futures Co. "For now it seems that another crisis may have been averted."

    Copper for delivery in three months on the London Metal Exchange gained as much as 0.9 percent to $6,918 a metric ton, and traded at $6,879 at 3:00 p.m. Singapore time.

    The metal fell as much as 3 percent on Nov. 27, the most since Oct. 30, after government investment company Dubai World sought to defer some debt payments. That raised the prospect of rising loan losses for U.A.E. and foreign banks, spurring a dollar rally and sending commodities down by the most in a month.

    March-delivery copper on the Shanghai Futures Exchange added as much as 2.7 percent to 55,130 yuan ($8,075) a ton, the most in two weeks, before ending at 54,830 yuan. The metal has risen in nine of the past 10 months, more than doubling, and is set for its best year since at least 2000.

    Dollar Weakens

    Copper in London, which reached a 14-month high of $7,060 on Nov. 26, has rallied 123 percent this year and is poised for its best year since at least 1987, as the dollar dropped 8.2 percent against the currencies of six major trading partners. The Dollar Index declined as much as 0.7 percent today.

    "In recent months, movements in currency markets, especially the U.S. dollar, have been an influence on commodity prices, including base-metals prices," Lachlan Shaw, analyst at Commonwealth Bank of Australia, said in an e-mail.

    "The fragility of the U.S. dollar may also have encouraged some investment flow into commodities, including base metals, as a hedge against U.S. dollar weakness," Shaw added.

    Among other LME-traded metals, aluminum was little changed at $2,015 a ton, zinc gained 0.5 percent to $2,240 a ton, and lead added 0.4 percent to $2,310 a ton. Nickel rose 0.6 percent to $16,185 a ton, and tin was 0.4 percent higher at $14,950 as of 1:50 p.m. in Singapore.

    (Source: Bloomberg)

 

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