Feb. 1 (Bloomberg) -- Copper and tin jumped to records as shrinking global stockpiles signaled demand is improving amid expectations for shortages in supplies. Nickel climbed to a nine-month high.
Three-month copper on the London Metal Exchange gained as much as 0.9 percent to $9,832 a metric ton, surpassing the previous peak of $9,782 reached yesterday, and was at $9,820 at 12:10 p.m. in Singapore. The metal capped a seventh monthly gain in January, the best run since the eight months to August 2009.
"Stockpile data seems to point to improving demand,” Zhang Wenhai, an analyst at Yingda Futures Co., said from Beijing. “Investors are very optimistic China will ramp up consumption after the Spring Festival.” China’s financial markets will be closed from Feb. 2 to 8 for the Lunar New Year.
Copper inventories monitored by the London Metal Exchange decreased yesterday by the most in 11 months, with the decline coming from warehouses in the U.S., the world’s second-biggest user after China. Stockpiles tallied by the Shanghai Futures Exchange fell for a second week last week, after reaching a seven-month high on Jan. 13, according to Bloomberg data.
May-delivery metal on the Shanghai Futures Exchange rose as much as 1.8 percent to 75,190 yuan ($11,410) a ton, the highest since April 2007, and ended the morning at 74,900 yuan. Futures on the Comex in New York gained 0.4 percent to $4.4765 a pound.
Copper, often seen as an economic indicator because it’s used in construction and electrical applications, surged 30 percent in 2010 as the global economy rebounded from the worst recession since World War II. China’s manufacturing growth slowed for a second month in January, the China Federation of Logistics and Purchasing said today, easing concerns the government may further tighten monetary policy.
The world may be short of 822,000 tons of copper in 2011, more than double last year’s deficit, according to Barclays Capital. The International Copper Study Group, JPMorgan Securities Ltd. and Macquarie Bank Ltd. have also predicted a shortfall, prompting analysts including those at Morgan Stanley and Australia & New Zealand Banking Group Ltd. to boost their price forecasts.
Tin in London also climbed to its highest ever, gaining as much as 1 percent to $30,400 a ton, as supply of the metal used in soldering and packaging is expected to lag behind demand this year through 2013. Tin was the best performing metal on the LME last year on dwindling supplies from Indonesia, the world’s largest exporter, and reduced output in China and Africa.
Tin inventories monitored by the exchange shrank 39 percent last year, the largest decrease since 2004. They dropped for a second day yesterday.
"The low interest rate environment in the U.S. will weigh on the dollar, which is generally supportive of metals prices,” said Xu Feng, an analyst at Nanzheng Futures Co. Federal Reserve policy makers last week retained a pledge in place since March 2009 to keep its benchmark interest rate “exceptionally low” for an “extended period.”
The dollar fell for a second day against a basket of six currencies including the euro, on speculation the global economic recovery is gathering pace. Dollar-denominated commodities tend to move inversely to the U.S. currency.
Nickel rose as much as 0.7 percent to $27,550 a ton, the highest price since April, before trading at $27,533 a ton. Lead increased 0.4 percent to $2,520 a ton, aluminum gained 0.2 percent to $2,524.75 a ton, while zinc was little changed at $2,428.50 a ton.