December 10, 2013 / 11:46 AM / 4 years ago

METALS-Copper hits 1-month high on weak dollar, demand prospects

* Euro at six-week high against dollar

* China bonded copper premiums up $5 at $195/$210 from prior month

By Harpreet Bhal and Silvia Antonioli

LONDON, Dec 10 (Reuters) - Copper touched its highest level in a month on Tuesday, aided by a weaker dollar, with steady buying from top consumer China also helping to underpin prices.

Three-month copper on the London Metal Exchange closed at $7,159 a tonne from a last bid of $7,130 after hitting a session high of $7,188, its highest in a month.

The metal used in power and construction is down about 10 percent for the year to date. It broke below $7,000 a tonne in mid-November after holding in a $7,000-$7,400 range since August.

Supporting prices, the euro rose to a six-week high against the dollar. A weak dollar makes commodities priced in the U.S. unit cheaper for holders of other currencies.

“The weaker dollar is helping, but the copper market is also finally pricing in the tension on the physical market due to both higher physical demand and lower stocks in warehouses,” T-Commodity consultant Gianclaudio Torlizzi said.

“After all, the latest data from China leaves little doubt on the state of its economy; the market was too bearish on China.”

The services industry in top metals consumer China grew at a steady pace in November, a private survey showed earlier this month, an indication of strength in the world’s second-largest economy as the government embarks on a sweeping restructuring drive.


Investors are also watching the U.S. Federal Reserve, which is expected to begin trimming its commodity-friendly monthly asset purchases in March, a Reuters poll showed.

Some economists, though, were warming to the idea it could do so as early as this month or at the January policy meeting.

“We are expecting demand conditions in the first quarter next year to be much more positive, not just in China ... but in the rest of the world as well,” said analyst Matt Fusarelli of Sydney-based AME Group.

Physical demand for copper remained strong, with bonded copper premiums up $5 at $195/$210 a tonne from month-ago levels, according to price provider Shmet. ()

In other metals, nickel appears set to trend higher in 2014 due to tighter supplies, while unfavourable economics should keep pressure on gold and oil and prompt investors to avoid much of the commodity complex, Barclays said.

Nickel prices have performed better than other metals for the past two weeks, gaining around 3 percent, but the stainless steel ingredient is by far the worst performer this year with losses of more than 18 percent.

Nickel closed at $22,450 from a close of $23,995, having hit its highest level in a month earlier in the session at $14,120.

Aluminium ended at $1,803 from $1,793, while zinc finished at $1,946 from a last bid of $1,918, and lead at $2,122 from $2,110.

Tin lost 3.4 percent to close at $22,450 from $23,250 as traders bet the government in Indonesia, the world’s top exporter of refined tin, will find a way around a mineral ore export ban, which threatens to cut exports from mining companies in the country.


Three month LME copper

Most active ShFE copper

Three month LME aluminium

Most active ShFE aluminium

Three month LME zinc

Most active ShFE zinc

Three month LME lead

Most active ShFE lead

Three month LME nickel

Three month LME tin

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