Copper and aluminium rose to their highest levels in over a year on Wednesday, on the back of fresh investment buying after fears eased about Dubai's debt problems and upbeat data bolstered the recovery picture. Lead hit an 18-month high, while zinc was its highest since March 2008, as world stocks advanced for a third straight session with anxiety over Dubai's debt problems taking a back seat.
Gold touched a fresh record high. Copper for three-months delivery on the London Metal Exchange rose to $7,170 a tonne, its highest since September 2008 while fund buying pushed aluminium to $2,165.25 a tonne, its loftiest since late October 2008.
At the close, copper, used in power and construction, was $50 higher at $7,125 a tonne, while aluminium gained $54 to $2,157, as investors returned to the market after taking fright last week when news emerged of Dubai World's debt problems. "Metals are much more receptive to good news than bad news," Abe Ulusal, an analyst at Mitsui Bussan Commodities in New York said.
"We see renewed fund buying in copper after the concerns over Dubai debt crisis faded away," he said. Copper has risen more than 130 percent this year, on course for its biggest annual increase since at least 1978. But it remains some way off a record peak of $8,940 struck in July last year, before the collapse of global markets in the last quarter.
Analysts added that sentiment was supported by data from the day before showing China's economy was ending the year on a strong note, laying the foundations for solid expansion in 2010 from the world's top copper consumer. Copper prices are continuing to climb despite demand from China cooling off and stocks of copper at LME warehouses continuing to plough higher. Stocks last rose 2,000 tonnes to 443,000 tonnes, their highest level since late April.
"Regardless of easing imports from China and slackening physical demand, sentiment remains upbeat for base metals, " said Andrey Kryuchenkov, an analyst at VTB Capital. Aluminium, used in transport and packaging, was at $2,157 from $2,103. Aluminium inventories fell 3,800 tonnes, but were still near record highs in the region of 4.6 million tonnes.
Option expiry takes place on Wednesday. There are more than 18,000 outstanding contracts to buy - far outweighing those to sell - around 450,000 tonnes of aluminium at prices between $2,000 and $2,150 a tonne. Zinc rallied to $2,437 a tonne, its highest since end-March last year, before closing at $2,420 from $2,372 and battery material lead ended the day at $2,480 from $2,468 and an earlier 18-month high of $2,525.50 a tonne. Tin was last bid at $15,225 from $15,200 and nickel was at $16,450 from $16,295.
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