Shanghai copper rallied more than 2 percent on Tuesday following a 2 percent surge in London futures to a seven-week high as the dollar fell and threats to supply focused attention on limited metal stocks. The most-active September copper contract on the Shanghai Futures Exchange rose 2.4 percent or 1,540 yuan to 65,810 yuan ($8,654) a tonne.
"Copper could hit $8,000 in London and 68,000 yuan in Shanghai in this rally, but it depends on the situation after the coming option expired date," said a futures analyst at a leading Chinese copper smelter.
He added that in order to revisit record levels, prices would need to ease below 62,000 yuan to spur domestic consumption. "Then I believe the price could reach an all-time high again this year," he said.
Copper for delivery in three months on the London Metal Exchange was up $15 at $7,725. It is at its highest since mid-May and just 12 percent shy of the record $8,800 a tonne high touched in May 2006. The dollar weakened to $1.3618 against the euro, around its lowest since May and against sterling the dollar hit a 26-year low, helping entice fresh fund money into commodities as the third quarter got under way.
Also supportive was a 2,100 tonne decrease in LME stocks highlighting the threat posed by a series of industrial disputes around the world. In Chile, Collahuasi, one of the world's largest copper mines, requested government mediation on Friday to try to avoid a strike by 698 workers.
Elsewhere in Chile, state copper miner Codelco subcontract workers have staged violent protests for better pay and working conditions. Tonga-than-expected US manufacturing data, which hit a 14-month peak helped boost sentiment towards industrial metals.
LME lead eased $20 to $2,760 from its record close on Monday. "Lead once again finished above aluminium, rising strongly throughout the day, shrugging off a small increase in LME stocks," Standard Bank said. "Lead benefited from short-covering, new fund inflows and the general dollar weakness that helped the rest of the complex." Shipping delays at a large Australian mine and falling Chinese exports are supporting lead prices.
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