Copper climbed to trade near its highest price in almost 27 months as U.S. employment data added to signs the Federal Reserve may expand credit-easing measures to spur economic growth, weakening the dollar and boosting demand for alternative assets. Tin and nickel also advanced.
Copper for delivery in three months on the London Metal Exchange rose as much as 0.6 percent to $8,310 a metric ton and traded at $8,290 by 2:39 p.m. in Singapore. The metal climbed to $8,326 a ton yesterday, the highest price since July 2008. Copper futures for December delivery in New York gained 0.7 percent to $3.7795 a pound. The Shanghai Futures Exchange will re-open tomorrow after the National Day holiday.
Base metals prices are supported by a weaker dollar “as markets continue to digest central banks’ current appetite for quantitative easing,” Commonwealth Bank of Australia analyst Lachlan Shaw wrote in an e-mail today.
The dollar dropped against a basket of six major currencies including the euro and yen to the lowest since since January. A private report yesterday based on payrolls showed unexpected U.S. job losses in September.
The U.S. currency traded near a 15-year low against the yen and close to an eight-month low against the euro before reports forecast to show an increase in initial U.S. jobless claims and the unemployment rate.
Workers at Anglo American Plc and Xstrata Plc’s Collahuasi copper mine in Chile, the world’s largest producer, rejected a wage offer and will enter negotiations over new contracts before an Oct. 31 deadline, union official Manuel Munoz said in a telephone interview yesterday.
“We retain our positive view on the sector as supply-demand balances are tightening in most metals markets,” Stefan Graber, an analyst at Credit Suisse Group AG, wrote in a note to clients today. “Temporary setbacks should in our view be used as buying opportunities.”
Aluminum in London rose 0.6 percent to $2,379.50 a ton, zinc gained 0.4 percent $2,343 a ton, lead climbed 0.4 percent to $2,325 a ton and nickel advanced 0.8 percent to $24,990 a ton. All four metals touched five-month highs yesterday. Tin added 1 percent to $26,500 a ton, after reaching a record $26,790 a ton yesterday.
“While the near-term commodity market outlook is benign given global cyclical conditions, commodity prices are projected to remain high by historical standards over the medium term, with risks tilted to the upside,” the International Monetary Fund said.
The world economy will expand 4.8 percent this year, the Washington-based lender said in a report yesterday, up from its forecast of 4.6 percent three months ago. The fund projects growth of 4.2 percent next year, down from 4.3 percent, as high unemployment, public debt and fragile banking systems pose risks to global prosperity.
“The upward shift in commodity demand growth that started some 10 years ago is expected to be sustained as global growth continues to be driven by emerging and developing economies,” the IMF said. “A sustained upward shift in commodity demand can lead to long periods of trend increases in real commodity prices because of sluggish supply responses, given long lags for exploration and investment. There is evidence that base metals are in the midst of such a trend upswing after 20 years of trend declines.”