Copper rose in New York and London before a report that probably will show a pickup at service industries in the U.S., the world’s second-largest user of the metal. Tin climbed to a record.
The Institute for Supply Management’s non-manufacturing index, which covers about 90 percent of the U.S. economy, gained to 52, the median forecast of economists surveyed by Bloomberg News shows. The figures may give clues as to how near the Federal Reserve is to injecting more money into the economy, said Robin Bhar, an analyst at Credit Agricole CIB in London.
“If it comes in weaker, it plays into the hands of Fed members that are supportive of more quantitative easing,” he said, referring to debt purchases by the central bank. Ample liquidity is likely to support metals, according to Bhar.
December-delivery copper advanced 4.35 cents, or 1.2 percent, to $3.7075 a pound at 8:10 a.m. on the Comex in New York. Copper for delivery in three months rose 1.1 percent to $8,148 a metric ton on the London Metal Exchange. Tin touched $25,800 a ton on the LME.
“We still favor copper and believe that shortages will lead to price spikes in 2011,”
Goldman Sachs Group Inc. analysts led by Jeffrey Currie in London said in a report today.
Copper will trade at $11,000 a ton in a year, the bank said, compared with an estimate of $8,050 in a Sept. 17 note. Prices reached a record $8,940 on July 2, 2008.
‘Easy Money’
Prices gained today as the U.S. Dollar Index, a six- currency measure of the greenback’s strength, dropped as much as 0.6 percent, making dollar-priced metals cheaper in terms of other monies. The Bank of Japan cut its key interest rate and said it would create a fund to buy government bonds and other assets, sending the yen lower.
“It is all, in a way, competitive devaluations of currencies,” Credit Agricole’s Bhar said, adding that “easy money” helped prices to gain in recent years. The LME Index of the six main metals traded on the exchange almost doubled in the two years through 2006.
The ISM index, due at 10 a.m. in Washington, was at 51.5 in August. The services survey covers industries that range from utilities and retailing to health care, housing, finance and transportation.
Tin for three-month delivery on the LME was last up 1.6 percent at $25,602 a ton, paring a climb of as much as 2.4 percent. The previous record, set in May 2008, was $25,500. The metal is this year’s best LME performer, up 52 percent, after production disruptions in Indonesia and Democratic Republic of Congo bolstered prices.
More Demand
“The fundamentals are helping,” Bhar said. “It is a bit like the copper story. If you don’t have enough supply, then with demand beginning to pick up, the market is concerned.”
Copper stockpiles slipped 0.1 percent today to 374,100 tons, exchange figures showed. They shrank 17 percent in the third quarter and are headed for the first annual contraction since 2004.
Orders to draw copper from LME inventories, or canceled warrants, slid 7.1 percent to 17,050 tons, the lowest level since May 12. That was the 10th drop in a row, matching the longest declining streak since May 11.
Aluminum for three-month delivery on the LME climbed 0.1 percent to $2,366 a ton. The exchange canceled 220 lots of the three-month contract traded just after the open of its Select electronic trading system.
Nickel rose 0.7 percent to $24,302 a ton, after reaching $24,423, the highest since May 5. Zinc advanced as much as 2.8 percent to $2,293.50 a ton, the highest since April 30, and was last at $2,281. Lead climbed 1 percent to $2,300 a ton.Source: Bloomberg
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