METALS-Copper hits 2-yr top on post-Fed dollar weakness

Thu Nov 4, 2010 3:47pm EDT

 * Copper hits 2-yr top in post-Fed rally
 * Chilean strike offers near-term support
 * Coming up: U.S. October non-farm payrolls on Friday
 (Recasts with New York closing copper price, adds NEW YORK
dateline/byline and analyst comments)
 By Chris Kelly and Pratima Desai
 NEW YORK/LONDON, Nov 4 (Reuters) - Copper surged to its
highest in more than two years on Thursday as the dollar faltered
and risk appetite grew a day after the U.S. Federal Reserve
detailed plans to boost growth in the world's largest economy.
 The Fed on Wednesday said it would buy about $600 billion in
longer-term Treasury bonds through the end of June 2011, in an
effort to lower borrowing costs for consumers and businesses still
suffering from the worst recession since the Great Depression.
[ID:nN03163902]
 Investors cheered the package, driving prices of riskier
assets such as stocks and industrial metals higher, while dumping
their safe-haven bets in the dollar.
 "The one thing that we took away from yesterday's Fed package
was it's not going to change the dollar's direction," said Justin
Lennon, analyst at Mitsui Bussan Commodities (U.S.A.) Inc.
 On the London Metal Exchange (LME), benchmark copper for
three-month delivery CMCU3 ended up $280 at a session high of
$8,600 a tonne. It was copper's biggest percentage gain in 3-1/2
months and a price not seen since July 2008, when it touched an
all-time record at $8,940 a tonne.
 On the COMEX metals division of the New York Mercantile
Exchange, copper for December delivery HGZ0 shot up 12.70 cents,
or 3.4 percent, to settle at $3.9120 per lb, the highest level on
a settlement basis for the second-position futures contract since
July 3, 2008.
 "I think the dollar weakness is not over for this quarter. In
the coming two months we might see further gains (in metals),"
said Peter Fertig, analyst at Quantitative Commodity Research.
 A weaker dollar tends to make commodities priced in the U.S.
currency cheaper for holders of other currencies. The dollar's
losses accelerated after the European Central Bank decided to hold
interest rates steady. [USD/]
 Also helping copper's ascent, Chile's Collahuasi mine union
said on Thursday workers would start striking at the world's No. 3
copper mine early on Friday. [ID:nN04101727]
 "In this environment, any commodity that picks up a bullish
fundamental will tend to outperform," said Sterling Smith, an
analyst for Country Hedging Inc in St. Paul, Minnesota.
 "It's kind of hard today to separate how much of this was the
mine strike and how much was the quantitative easing pushing
copper up, but again, this development could easily boost prices
coming into the end of the week," he said.
 Still, the market needs to get through Friday's key U.S.
monthly employment report, which will give investors a better idea
of prospects for the U.S. economic recovery, and, by implication,
for metals demand.
 ENERGY
 Industrial metal markets have in recent weeks started to fret
that Chinese plans to restrict energy consumption to cut emissions
would hamper the country's production capability.
 "That is the overriding issue. I haven't heard that it is
impacting copper smelters yet, but I think it will," said Fairfax
analyst John Meyer said.
 Analysts estimate that energy accounts for about 25 percent of
production costs of industrial metals. [ID:nTOE69H066]
 The number for aluminum is about 40 percent globally, while in
China, energy accounts for nearly 50 percent of total aluminum
production costs.
 Three-month aluminum CMAL3 ended up $43 at $2,460 a tonne,
after earlier touching its highest since April, at $2,492.
 Zinc CMZN3 jumped nearly 5 percent to $2,520 a tonne,
reversing most of the previous session's loss on plans by China's
State Reserves Bureau to sell 50,000 tonnes of zinc ingots.
[ID:nBJI002437] [ID:nLDE6A31HD]
 It jumped $107 to end at $2,512.
 Lead CMPB3 rose $94 to finish at $2,529 a tonne and tin
CMSN3 firmed $650 to $26,500.
 Nickel CMNI3 peaked at $24,605 a tonne, its highest since
Oct. 14, before ending up $950 at $24,500.
 Metal Prices at 1909 GMT
 COMEX copper in cents/lb, LME prices in $/T and SHFE prices in
yuan/T
 Metal            Last      Change  Pct Move   End 2009   Ytd Pct
                                                         move
 COMEX Cu       390.15       11.65     +3.08     334.65     16.58
 LME Alum      2457.00       40.00     +1.65    2230.00     10.18
 LME Cu        8599.00      279.00     +3.35    7375.00     16.60
 LME Lead      2528.00       93.00     +3.82    2432.00      3.95
 LME Nickel   24490.00      940.00     +3.99   18525.00     32.20
 LME Tin      26475.00      625.00     +2.42   16950.00     56.19
 LME Zinc      2512.00      107.00     +4.45    2560.00     -1.88
 SHFE Alu     16680.00      145.00     +0.88   17160.00     -2.80
 SHFE Cu*     64460.00      620.00     +0.97   59900.00      7.61
 SHFE Zin     20075.00      375.00     +1.90   21195.00     -5.28
** Benchmark month for COMEX copper
* 3rd contract month for SHFE AL, CU and ZN
SHFE ZN began trading on 26/3/07
 (Additional reporting by Maytaal Angel in London; Editing by Lisa
Shumaker)