Copper and tin hit new peaks

Copper scaled new all-time peaks and tin hit a record on Monday, as supply tightness bolstered both metals, while a surprise jump in copper imports from top metals consumer China brightened sentiment.

Copper for three-month delivery on the London Metal Exchange closed at $10,160 from $9,961 a tonne on Friday. The metal used in power and construction hit a record high of $10,168.50 earlier.

Tin hit a record high of $32,460 a tonne, before finishing up at $32,450 from $31,775, as supply constraints in Indonesia supported prices.

Used extensively in the power and construction sectors, copper has surged more than 60 percent since last June, when financial and commodity markets tumbled on fears of sovereign defaults in euro zone countries such as Greece.

But robust demand from emerging nations and recovering demand from the West, against a backdrop of limited supply is seen as increasingly bullish for prices.

“The import data was stronger than the market had expected. Generally the market had expected a continuation of the trend … for weaker exports,” said analyst Gayle Berry of Barclays Capital regarding the Chinese data. “But the imports were up month on month and year on year, and that has certainly given us a renewed boost to market sentiment.”

Preliminary Chinese trade data showed copper imports jumped a surprise 5.7 percent to 364,420 tonnes in January.

“The market’s taken these numbers in a very bullish way,” said Robin Bhar, an analyst at Credit Agricole. “China’s appetite is insatiable.”

Investors will focus on Chinese inflation data due out on Tuesday as the market remains concerned about the degree to which demand could be affected by the country’s efforts to rein in inflation, following last week’s rate hike.

Traders said that consumer prices (CPI) may have risen 4.9 percent in the year to January, well below the consensus forecast of 5.3 percent. The official data will be announced on Tuesday.

Prospects for inflation could hamper metals going into the second half as emerging market central banks draw in monetary policy, said MF Global in a note.

“There continues to be legitimate worries about rising inflation fears, particularly in emerging markets…This is not exactly a conducive backdrop for commodity price appreciation, especially heading into the second half of 2011.”

Stocks of copper in LME warehouses on Friday rose 5,050 tonnes to a six-month high of 401,775 tonnes, continuing a recent climb that has kept optimism about demand in check.

Aluminium ended at $2,514 a tonne from $2,496. Stocks of aluminium in LME warehouses dipped 4,725 tonnes to 4,594,725 tonnes, within reach of a record high of 4,640,750 tonnes hit in January 2010 as market sources said expiring finance deals were boosting stock levels.

However cancelled warrants — metal tagged for removal from warehouses — rose by nearly 50,000 tonnes, having climbed by double that amount in Detroit since Thursday, pointing to a pick-up in demand from key consumer the autosector.

“Strong auto production growth is good news for many commodities, accounting for about 25 percent of aluminium (including secondary), 25 percent of zinc, 15 percent of steel and 10 percent of copper usage,” said Macquarie in a note.

Also grabbing investors’ attention, Russia’s United Company RUSAL Ltd, the world’s largest aluminium producer, said on Monday an aluminium exchange traded fund (ETF) could be launched soon in the UK.

“The question is, will the ETF launch mop up that excess?” Bhar said of LME stocks.

Rusal said it sees steady output growth in 2011, driven by strong demand from China and a rebound in North America.

Elsewhere, zinc ended at $2,541 a tonne from $2,465 a tonne, battery material lead was at $2,640 from $2,560 a tonne.

Nickel closed at $28,895, its highest in nearly three years as LME stocks decline, reflecting a seasonal uptick in stainless steel demand. Source: Financial Post