Copper prices rose more than 1 percent to a fresh 16-month high on Thursday, notching a 139 percent year-on-year rise, as fund buying and a looming mine strike in Chile buoyed prices on the final trading day of 2009. Benchmark copper for three-month delivery on the London Metal Exchange closed at $7,375 a tonne in the rings from $7,330 at the close on Wednesday.
Copper, used in power and construction, earlier touched $7,423.75, its highest since September 1, 2008. The bullish mood that has lifted copper prices this year is seen by many analysts as setting the tone for early 2010. "Quite a bit of a rally in a very thin market," said Herwig Schmidt, head of sales at Triland Metals. "It's the wall of money hitting the market still."
"Next year we'll probably see between $8,000 and $10,000 in copper," he added. "It's not that I'm bullish on industrial demand, more the chase for useful assets and anticipation on inflation." Unprecedented levels of Chinese imports, new investor cash, improving economic data and a weaker dollar have combined this year to more than double copper prices from a closing level of $3,090 on December 31, 2008.
"In one way I was glad to see China was there to buy when the market was cheap because of high confidence in their economy," said Schmidt. "Go into 2010 and there is money to be invested and where does it go - into the best performers. "You cannot help but be in commodities."
But copper prices are still some way off their all-time high of $8,940 notched in July, 2008, before the full extent of the global economic downturn affected industrial metal prices. Thursday's copper rally also aided zinc, which hit its highest since March last year, and tin, which was trading near its firmest level in more than 12 months.
INVENTORIES JUMP Capping metals' gains were demand issues, which remain. LME copper stocks continue to rise, indicating demand has yet to recover outside China, the world's largest metals consumer. The latest data showed stocks rose 6,375 tonnes to above 500,000 tonnes, their highest level since April.
Aluminium ended at $2,230 in LME rings versus $2,242 but earlier touched a near two-week high at $2,274. LME stocks of the metal, used in transport and packaging, climbed 475 tonnes to remain near record levels above 4.6 million tonnes. Steel making ingredient nickel closed at $18,525 in LME rings from $18,900 while battery material lead ended at $2,432 from $2,411. LME nickel's stockpiles jumped 4,074 tonnes to a new record of 158,010 tonnes. Zinc closed at $2,560 in official rings from $2,552 and tin was at $16,950 from $16,700.
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