Copper jumped 2 percent on Friday to end 2010 at a record high, with analysts pointing to undimmed demand from China and the prospect of fresh fund investment beckoning further gains in the year ahead. After a year of divergence for the base metals complex, with tin leading gains at 59 percent and zinc slipping 5 percent, copper is expected to steam further ahead as ore grades decline, new mines remain scarce and top consumer China grows.
-- Copper up 31pc, tin rises 59pc
-- Zinc poorest performer, falls 5pc
Benchmark copper on the London Metal Exchange ended ring trading bid at $9,960 a tonne, securing a 31 percent gain from $7,375 a tonne at the close on December 31, 2009. It earlier reached a record of $9,687 on Friday, its third peak in a row. In its December forecast, Goldman Sachs said it expected prices to hit $11,000 this time next year.
The commodities sector - particularly copper and gold - has been a standout performer in 2010, outperforming bonds and European shares. Fund manager Patrick Armstrong of Armstrong Investment Managers said he expected prices to rise another 25 percent. The price of cash copper moved into a premium - or backwardation - against the benchmark in early November, signalling a lack of immediately available supply.
The prospect of limited supply for next year has been driving gains this year, said BNP Paribas analyst Stephen Briggs. BNP Paribas sees a 500,000 tonne deficit in the roughly 20 million tonne market next year. Among other base metals, tin was the outperformer for the year, with prices up by nearly 60 percent. Constrained supply from top exporter Indonesia is expected to drive prices to new records, having reached $27,500 a tonne in November. LME tin was little changed on Friday, ending the year at $26,870 in LME rings, up 59 pct from end-2009.
Nickel was up on Friday at $24,950 in LME rings, up some 35 percent for the year. Prices have rallied in anticipation of a pickup in stainless steel demand, despite ample stockpiles. LME nickel stocks hit a record of 166,476 in February, and have since declined some 20 percent. LME zinc rose slightly on the day to finish the year down 5 percent at $2,440 per tonne. Battery material lead also rose on the day to $2,560 a tonne, up 5 percent for the year. LME aluminium rose toward two-year highs near $2,500 a tonne on Friday and ended bid at $2,467 rings, up 11 percent for the year.
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