| Manufacturing, Weak Dollar Push Copper to 2-Wk High |
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| 07/01/2009 | |
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By Chris Kelly and Maytaal Angel NEW YORK/LONDON, July 1 (Reuters) - Copper surged on Wednesday to its loftiest level in more than two weeks, driven by extended losses in the dollar and upbeat manufacturing surveys in the United States, Europe and China that reinforced economic recovery hopes. Other industrial metals also surged with lead hitting a two-week peak of $1,760 a tonne and nickel gaining more than 8 percent at $16,600, its highest level since late September. Copper for September delivery HGU9 on the New York Mercantile Exchange's COMEX division jumped 5.85 cents, or 2.6 percent, to close at $2.3305 a lb, after hitting its highest level in 2-1/2 weeks at $2.3690. Benchmark copper MCU3 on the London Metal Exchange touched $5,187.50, the highest since June 15, before ending up $120 at $5,090 a tonne. "It's all about the dollar and it's all about the confidence in Chinese (economic) recovery to continue," said Michael Pento, chief economist with Delta Global Advisors in Huntington Beach, California. China's manufacturing sector extended a steady recovery in June. The official purchasing managers' index (PMI) rose to 53.2 from 53.1 in May, consolidating for the fourth month in a row above the watershed mark of 50. Data from the Institute for Supply Management showed manufacturing in the United States, the world's largest economy, shrank in June, but at a slower pace than the month before. "It is moving in the right direction, I don't think it can move much faster given underlying economic weakness," said Justin Lennon, analyst at Mitsui Bussan Commodities. Lennon said the fall in the new orders component in the ISM survey to below 50, a level which divides expansion from contraction, was probably due to a seasonal slowdown in manufacturing activity. Similar survey in Europe also showed manufacturing contracting less than initially thought. The improved manufacturing activity data hurt demand for the dollar as a safe haven, making metals priced in the U.S. currency cheaper for holders of other currencies. "I am not looking at a robust recovery in global GDP, but I think the BRIC countries will show surprising resilience and I think that the decline in the dollar against hard assets will maintain copper's upward trend," Delta Global Advisors' Pento said. TIED UP Also lifting sentiment in copper were falling stocks of the metal in LME warehouses, which at around 266,000 tonnes compare with levels around 500,000 tonnes in early April. LME copper has gained about 60 percent in the first half of this year, driven primarily by Chinese buying for stockpiles. Aluminum stocks fell 3,525 tonnes but remained near record levels at around 4.4 million tonnes. However, traders said about 70 percent of this material is tied up—possibly until next May—in financing deals. A shortage of aluminum in the near term is one reason why the metal used in transport and packaging has gained about 15 percent since the beginning of June. "There still persists a significant state of supply overhang in the market irrespective of recent price performance," Barclays Capital said in a note. Aluminum MAL3 closed at $1,663 a tonne from $1,630 on Tuesday. Zinc MZN3 at $1,595 a tonne from $1,545, lead MPB3 at $1,739 from $1,690 and nickel MNI3 at $16,450 from $15,350 on Tuesday. Tin MSN3 was untraded at the close, but bid at $14,500 from Tuesday's last bid at $14,150. Earlier it rose more than 6 percent to $15,000. Worries about nearby supplies of tin have pushed the premium for cash material over the three-month contract to around $82 a tonne from a discount of around $40 a tonne mid-June.
Metal Prices at 1825 GMT |
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