Metals - Copper strikes fresh seven-month high on strong Chinese demand
04.11.07, 9:20 AM ET
forbes.com
LONDON (Thomson Financial) - Copper struck a fresh seven-month high and rose towards 8,000 usd as the market focused on strong demand from China, the world's biggest consumer of the metal.
Also fuelling prices, the LME reported another hefty fall in stocks stored in warehouses across the globe.
At 12.41 pm, copper for three-month delivery stood at 7,947 usd, against 7,710 usd at the close yesterday. Prices had struck an intra day high of 7,950 usd earlier in the session.
Prices continued to rise since surging yesterday on the news that demand from China rose 58 pct year-on-year in the first three-month period of 2007, as reported by the Chinese customs office. Imports in March alone were up 61 pct from the same month last year.
Falling inventories stored in LME-certified warehouses also lifted prices. Stocks were down 2,100 tonnes at 175,500 tonnes today, said the LME in a daily report.
Other metals followed copper's lead but analysts warned a sharp correction may be due.
The market's current movement 'has been exaggerated by the hedge funds,' which encouraged extreme volatility 'at a time when the copper market was shaky,' said Alex Heath, at RBC Capital Market's base metals desk.
He explained strong Chinese import data encouraged speculative buying. The rally is 'perhaps not entirely justified by fundamentals,' he noted. Hefty imports of the metal into China are not being consumed, he said.
But, in the longer term, analysts still widely expect Chinese growth to underpin base metals, notably copper. 'We are in a long-term bull market. However, we think markets are ahead of themselves at the moment,' commented Heath.
Nickel also stayed close to its highs, supported by a fall in LME stocks amid critically low inventories.
Stocks of the metal are so low that current volumes available to the market would not be enough to satisfy one day's worth of global consumption.
Nickel was slightly lower at 48,550 usd from 48,600 usd seen yesterday.
In other metals, aluminum was higher at 2,894 usd from 2,870 usd at yesterday's close.
In the background, aluminium was supported by statements from Alcoa (nyse: AA - news - people ), the worlds second-largest producer of aluminium, behind Rusal, which said global aluminium consumption in 2007 is expected to remain robust despite a downturn in the North American truck market. Global consumption is expected to grow by 7.7 pct this year, with flat consumption growth in North America offset by stronger growth elsewhere particularly in China, it said.
'Longer-term, aluminium should be supported by prospects of tighter supply/demand, as highlighted by Alcoa's comments, and an increasing desire by the Chinese government to clampdown on surging aluminium production,' said UBS (nyse: UBS - news - people ) analyst, Robin Bhar.
Elsewhere, zinc was up at 3,612 usd against 3,540 usd, lead was up at 2,030 against 2,017 usd, zinc was up at 3,612 usd against 3,540, while tin was also up at 14,350 usd against 14,150 usd.
anealla.safdar@thomson.com |
