September 7, 2012 | Leave a Comment
LONDON: Copper rose to its highest price in nearly four months on Friday, driven by big metals consumer China’s approval of a multi-billion dollar infrastructure programme and the European Central Bank’s plan to shore up its region’s economy.
China, the world’s largest consumer of copper, gave the green light for 60 projects worth more than $150 billion that is expected to energise an economy mired in its worst slowdown in three years. Copper is used heavily in construction and power cables.
“I think the scale of it and the detail of it are quite copper positive. The fact that they have come out with a very targeted stimulus, targeting different areas is clearly very bullish,” said Marex macro strategist Guy Wolf.
Three-month copper on the London Metal Exchange was $7,855.5 a tonne in official rings from a last bid of $7,700 on Thursday, having earlier hit $7,880, its highest since mid May.
Copper was also swept higher in a broad rally across financial markets spurred by the ECB’s potentially unlimited bond-buying programme, which is expected to lower the borrowing costs of indebted countries and ease fears over the future of the euro.
The ECB plan lifted the euro as the dollar index fell to a four-month low. The softer dollar makes copper, and other commodities priced in dollars, more affordable for investors holding other currencies.
“This plan averts disaster, for now, rather than any long-term sustainable strategy. But that’s fine, that’s all that’s really required at the moment,” Wolf said.
“If China and the U.S. are supportive for copper, Europe only matters to the extent that is it going to implode or not.”
In the United States, expectations of a big rise in nonfarm payroll numbers, due out at 1230 GMT, have grown since data on private-sector employment on Thursday showed robust growth for last month.
“We expect some choppy action in outright prices leading up to the non-farm payrolls,” RBC said in a research note. “Overall we remain friendly to the market and would be keen to buy on dips back to the 100-day moving average in copper.”
Reuters data showed copper’s 100-day moving average at $7,663.
TIN Three-month tin was $19,950 per tonne in rings from $19,725 at the close on Thursday. The metal has fallen around 24 percent since February.
Refined tin shipments from Indonesia dropped 32 percent in August from the previous month, a trade ministry official said on Friday, as the current low prices for the metal continued to limit supplies from the world’s top exporter.
Three-month zinc, untraded in rings, was bid at $1,940 per tonne from $1,940 a t T hursday’s close and lead, also untraded, was bid at $2,070 f r om $2,048. Aluminium was $1,994 in rings from $1,975 and nickel was $16,260 from $16,060.