DJ BASE METALS: LME Copper Hits Record On Economic Confidence

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13-Dec-2010
By James Campbell
Of DOW JONES NEWSWIRES
SINGAPORE (Dow Jones)--Base metals were up on the London Metal Exchange in Asia Monday as data from China and the U.S. underpinned confidence about the economic outlook for next year.
Copper broke its previous record of $9,091 a metric ton in early trade and continued a steady advance despite a firm dollar, although trading volumes weren't especially heavy.
Strong Chinese trade data Friday were the primary driver of the buying, while news that U.S. exports surged to their highest levels in more than two years in October also helped.
In addition, China's decision not go ahead with a widely-expected interest rate increase around the weekend, despite on-year inflation in November rising to a two-year high of 5.1%, was a relief. Other tightening efforts taken by Beijing have so far failed to temper commodities demand.
At 0600 GMT, LME three-month copper was at $9,130 a metric ton, up $141, with 2,593 lots done. On the Shanghai Futures Exchange, March copper was at CNY69,110/ton, up CNY1,790 and at a $300 discount to the equivalent LME contract.
"The combination of continued strong Chinese growth, (with) 9.5% expected in 2011, U.S. quantitative easing initiatives, western world currency concerns and continued global growth all should serve as support for Chinese commodity import levels well into 2011," BMO Capital Markets analyst Bart Melek said in a report.
Macquarie Bank injected a note of caution about China's November copper imports, pointing out that a 29% on-month jump was partly a result of the week-long National Day holiday in October, which depressed imports for the month.
Still, with China's copper imports up 1% on year in the January to November period and data Monday showing China's copper production is up 12.6% on year, implied demand is firm and the fundamental underpinnings of the rally appear to be in place.
Other metals were being dragged higher in copper's wake. LME three-month zinc was at $2,332.50/ton, up $58.50, with 2,071 lots done, while aluminum was at $2,341/ton, up $33, with 698 lots done.
-By James Campbell, Dow Jones Newswires; 65-64154082; james.campbell@dowjones.com
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