Copper Climbs to One-Week High on Weaker Dollar; Aluminum Gains -Shanghai Metals Market

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Copper Climbs to One-Week High on Weaker Dollar; Aluminum Gains

Industry News 02:56:32PM Jan 19, 2010 Source:SMM

SINGAPORE, Jan. 19 -- Copper advanced for a second day to a one-week high as the dollar's drop boosted the purchase of raw materials as alternative investments. Aluminum and zinc gained.

The metal used in construction and automobiles also climbed as London Metal Exchange prices continued to trade at less than those in Shanghai, encouraging imports into China, the world's largest metals user. The dollar dropped for the seventh time in eight days against a six-currency basket today.

"We're seeing steady demand in China, which is expected to continue in these few weeks leading to Chinese New Year," said Jia Zheng, an analyst at Southwest Futures Co. from Shanghai. "It is profitable to import the metal for sale in the domestic market." The Lunar New Year holiday, which precedes the peak- demand season, starts on Feb. 14 and lasts a week.

Copper for delivery in three months on the London Metal Exchange added as much as 1.3 percent to $7,595 a metric ton, the highest level since Jan. 12, and traded at $7,585 at 3:01 p.m. in Singapore. March-delivery copper on the Comex division of the New York Mercantile Exchange rose as much as 2.6 percent to $3.4520 a pound.

The May-delivery contract on the Shanghai Futures Exchange advanced for a second day, by as much as 1.4 percent to 61,820 yuan ($9,055) a ton, before ending the day at 61,790 yuan.

Copper futures in China are trading at a premium to their London Metal Exchange counterpart after advancing 11 percent in the past month, compared with a 9.3 percent gain in London. The price in Shanghai today was more than 1,000 yuan a ton higher than in London, after accounting for China's 17 percent value- added tax, according to data compiled by Bloomberg.

China Tightening

China's central bank guided its benchmark one-year bill yield to the highest level in 14 months to curb record loan growth which drove property sales up by 75.5 percent to 4.4 trillion yuan ($644 billion) last year.

"Residential real estate construction has been one of the key drivers of commodity consumption and restocking activities," said Hao Hong, global equity strategist for China International Capital Corp. "Given that construction activity could moderate amid the government tightening campaign, China's demand for commodities could moderate in the near term."

The dollar traded near a four-week low against the yen before reports this week that may show U.S. building permits rose at a slower pace and manufacturing in the Philadelphia region fell, prompting speculation the Federal Reserve will keep interest rates near zero to sustain economic growth.

Among other LME metals, aluminum rose 0.8 percent to $2,322 a ton, zinc gained 2 percent to $2,530 a ton, and lead climbed 1.2 percent to $2,495 a ton. Nickel added 1.1 percent to $19,100 a ton, while tin was up 0.3 percent at $18,050 a ton.

 

 

 

Copper Climbs to One-Week High on Weaker Dollar; Aluminum Gains

Industry News 02:56:32PM Jan 19, 2010 Source:SMM

SINGAPORE, Jan. 19 -- Copper advanced for a second day to a one-week high as the dollar's drop boosted the purchase of raw materials as alternative investments. Aluminum and zinc gained.

The metal used in construction and automobiles also climbed as London Metal Exchange prices continued to trade at less than those in Shanghai, encouraging imports into China, the world's largest metals user. The dollar dropped for the seventh time in eight days against a six-currency basket today.

"We're seeing steady demand in China, which is expected to continue in these few weeks leading to Chinese New Year," said Jia Zheng, an analyst at Southwest Futures Co. from Shanghai. "It is profitable to import the metal for sale in the domestic market." The Lunar New Year holiday, which precedes the peak- demand season, starts on Feb. 14 and lasts a week.

Copper for delivery in three months on the London Metal Exchange added as much as 1.3 percent to $7,595 a metric ton, the highest level since Jan. 12, and traded at $7,585 at 3:01 p.m. in Singapore. March-delivery copper on the Comex division of the New York Mercantile Exchange rose as much as 2.6 percent to $3.4520 a pound.

The May-delivery contract on the Shanghai Futures Exchange advanced for a second day, by as much as 1.4 percent to 61,820 yuan ($9,055) a ton, before ending the day at 61,790 yuan.

Copper futures in China are trading at a premium to their London Metal Exchange counterpart after advancing 11 percent in the past month, compared with a 9.3 percent gain in London. The price in Shanghai today was more than 1,000 yuan a ton higher than in London, after accounting for China's 17 percent value- added tax, according to data compiled by Bloomberg.

China Tightening

China's central bank guided its benchmark one-year bill yield to the highest level in 14 months to curb record loan growth which drove property sales up by 75.5 percent to 4.4 trillion yuan ($644 billion) last year.

"Residential real estate construction has been one of the key drivers of commodity consumption and restocking activities," said Hao Hong, global equity strategist for China International Capital Corp. "Given that construction activity could moderate amid the government tightening campaign, China's demand for commodities could moderate in the near term."

The dollar traded near a four-week low against the yen before reports this week that may show U.S. building permits rose at a slower pace and manufacturing in the Philadelphia region fell, prompting speculation the Federal Reserve will keep interest rates near zero to sustain economic growth.

Among other LME metals, aluminum rose 0.8 percent to $2,322 a ton, zinc gained 2 percent to $2,530 a ton, and lead climbed 1.2 percent to $2,495 a ton. Nickel added 1.1 percent to $19,100 a ton, while tin was up 0.3 percent at $18,050 a ton.