Copper prices rose to their highest in almost four months as supply worries continued ahead of the seasonally busy second quarter, analysts said. Copper for three months delivery on the London Metal Exchange hit $6,980 a tonne, its highest since December 7, before closing at $6,970, up 1.6 percent from Friday's close.
In New York, copper for May delivery settled up 3.30 cents at $3.1790 a lb on the New York Mercantile Exchange's COMEX division, its loftiest close since December 5, after trading a session range between $3.1075 and $3.1940.
"The market thinks that a raw material crisis is looming. Stocks are at very low levels and people are wondering where supplies of copper will come from," analyst John Meyer at Numis Securities said. Stocks of copper in LME-registered warehouses rose by 3,000 tonnes to 181,075 tonnes - still less than four days of global consumption. "The market is ignoring day-to-day movements and really focusing on what's happening in the slightly longer term," Meyer said.
Copper demand in China, the metal's biggest consumer, is expected to grow 21 percent to between 4.5 million and 4.7 million tonnes by 2010 from 3.8 million in 2006, a senior official of China Minmetals said last week.
Copper prices on the LME rose more than 13 percent in March on declining inventories, expectations of robust Chinese demand continuing and strong economic data from the United States. At current levels, copper is up 9.7 percent since the start of the year but still more than 20 percent below the high of almost $9,000 hit last May.
"The continued slide of copper prices up to early February left them down fully 40 percent from the peak of May 2006 and although they have since recovered by 30 percent, the mean will be 22-23 percent lower in Q1 than in Q3 2006," Societe Generale said in a report, arguing that prices would start falling again after the seasonally strong second quarter.
Japan's Sumitomo Metal Mining Co expects to produce 211,00 tonnes of copper in the first half of the year, up 14.4 percent from a year earlier, the company said. London-listed miners closed mixed, with Rio Tinto and BHP Billiton down less than half a percent while Anglo American and Vedanta edged up, in line with the FTSE index, which ended up 0.12 percent. Zinc prices fell to a session low of $3,120 on fund liquidation, before closing at $3,136, down 3.7 percent.
"Stop-loss selling. Funds liquidating but no particular news," an LME trader said. Steel-making raw material nickel ended the day at $45,400, up $600 from Friday's closing price but still far below the all-time high of $48,500 hit in mid-March. Prices were supported by a strike at producer CVRD-Inco.
"Nickel is pushing higher, continuing its strong showing from Friday, and teeing off on news that CVRD's technical and office workers at the company's Sudbury operation began a strike over the weekend after the company and 330 of its workers failed to agree on a new contract," Man Financial analyst Edward Meir said in a note. Aluminium fell $25 to $2,755, while lead was last quoted at $1,925/1,926. Tin closed at $13,745 a tonne, up 2.6 percent from Monday's close.
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