Copper’s Record Run Nears $10,000; Tin Advances to All-Time High

Copper surged to a record, with the price on the threshold of breaching $10,000 a metric ton, as shrinking inventories added to signs the global economic recovery is gathering pace. Tin also gained to an all-time high.

Three-month copper on the London Metal Exchange gained as much as 1.2 percent to $9,860 a metric ton, surpassing the previous peak of $9,782 reached yesterday, and traded at $9,853 at 3:20 p.m. in Singapore. The metal capped a seventh monthly gain in January, the best run since the eight months ended August 2009.

“Copper at $10,000 is only a matter of time,” said Liang Haisan, a Shanghai-based analyst at Citic Newedge Futures Co., a joint venture between Citic Group and Newedge Group. “The stage for higher prices was set a while ago and, barring any major economic shocks, prices will only go up from here.”

Copper inventories monitored by the London Metal Exchange decreased yesterday by the most in 11 months, with the decline coming from warehouses in the U.S., the world’s second-biggest user after China. Stockpiles tallied by the Shanghai Futures Exchange fell for a second week last week, after reaching a seven-month high on Jan. 13, according to Bloomberg data.

“Stockpile data seems to point to improving demand,” Zhang Wenhai, an analyst at Yingda Futures Co., said from Beijing. “Investors are very optimistic China will ramp up consumption after the Spring Festival.” China’s financial markets will be closed from tomorrow through Feb. 8 for the Lunar New Year.

May-delivery metal on the Shanghai Futures Exchange rose as much as 2.4 percent to 75,620 yuan ($11,481) a ton, the highest since April 2007, and ended the day at 75,580 yuan. Futures on the Comex in New York gained 0.7 percent to $4.4915 a pound.

Copper Shortage

Copper, often seen as an economic indicator because it’s used in construction and electrical applications, surged 30 percent in 2010 as the global economy rebounded from the worst recession since World War II. Mining companies have failed to keep pace with demand because new reserves are harder to find and the quality of ore is declining, meaning less metal is extracted from each ton of earth.

“Many investors see tightening in China as one of the biggest risks to the market,” said Zhang. “However, demand just needs to be stable and there won’t be enough metal to go round.” China’s manufacturing growth slowed for a second month in January, the China Federation of Logistics and Purchasing said today, easing concerns the government may further tighten monetary policy.

The world may be short of 822,000 tons of copper in 2011, more than double last year’s deficit, according to Barclays Capital. The International Copper Study Group, JPMorgan Securities Ltd. and Macquarie Bank Ltd. have also predicted a shortfall.

Tin Record

Goldman Sachs Group Inc. predicted in October that copper would trade at $11,000 a ton in a year, while Standard Chartered Plc forecast in August that the metal may rise to $12,000 in the next two years.

Tin in London also climbed to its highest ever, gaining as much as 1 percent to $30,400 a ton, as supply of the metal used in soldering and packaging is expected to lag behind demand this year through 2013. Tin was the best-performing metal on the LME last year on dwindling supplies from Indonesia, the world’s largest exporter, and reduced output in China and Africa.

Tin rose for a ninth day, the longest period of advance since September. Inventories monitored by the exchange shrank 39 percent last year, the largest decrease since 2004. They dropped for a second day yesterday.

Declining Dollar

“The low interest-rate environment in the U.S. will weigh on the dollar, which is generally supportive of metals prices,” said Xu Feng, an analyst at Nanzheng Futures Co. Federal Reserve policy makers last week retained a pledge in place since March 2009 to keep its benchmark interest rate “exceptionally low” for an “extended period.”

The dollar fell for a second day against a basket of six currencies including the euro, on speculation the global economic recovery is gathering pace. Dollar-denominated commodities tend to move inversely to the U.S. currency.

Nickel rose as much as 1.7 percent to $27,800 a ton, lead increased 1.2 percent to $2,539.75 a ton, aluminum gained 0.9 percent to $2,541.75 a ton and zinc climbed 0.7 percent to $2,444 a ton. Source:  Bloomberg