Copper rose to a one-week peak on Wednesday, supported by non-US investors as the euro hit its highest in more than a year versus the dollar and on prospects of better commodity imports data from top consumer China. Three-month copper on the London Metal Exchange closed at $9,605 per tonne, up from a close of $9,390 on Tuesday, when it shrugged off an interest rate hike in China.
The metal, up about 2 percent, was on track for its biggest daily percentage gain in two weeks. Supporting sentiment, policymakers signalled the European Central Bank will raise rates on Thursday. "There are expectations of a rate hike by the ECB, which is positive for the metal's price because it's priced in dollars," Carl Firman, an analyst at Virtual Metals, said.
China's central bank raised interest rates on Tuesday for the fourth time since October in an effort to battle inflation. "A new mood of optimism seems to be in the air following Chinese officials' comments indicating that inflation was under control and that tightening of monetary policy may not be so marked," Fairfax said in a note. The market expected China's copper, iron ore and coal imports in March to rebound, with March shipments of refined copper expected to rise from February's 27-month low.
"The general expectation is that those numbers will be reasonably positive because we know that some imports were delayed from February to March due to the Chinese New Year holiday," said David Wilson, director of metals research at Societe Generale. China's General Administration of Customs will publish preliminary import data for March on April 11.
Aluminium rose to $2,685 a tonne, its highest since September 2008. It later closed at $2,670 versus Tuesday's $2,641 close, partly lifted by strong energy prices. Oil stuck near a 2-1/2 year peak on unrest in the Middle East and North Africa. Energy accounts for about 40 percent of the cost of producing aluminium. RBS analyst Nick Moore said investors were also scrambling for value. "Aluminium is still some 20 percent below its peak and people are looking at it as a commodity with value. "Copper is richly priced and so they're rotating into aluminium."
Open interest on aluminium LME contracts are near their highest since the middle of January. Aluminium was later at $2,656 per tonne. Latest data showed inventories of the metal in LME warehouses were down 4,175 tonnes at 4,589,000, but remained consistently high and within reach of a record high 4,640,750 tonnes hit in January last year. Moore said the market had grown used to the high stocks. Nickel was at $26,425 per tonne from $25,405 and tin was at $32,100 a tonne from $31,605. Lead was at $2,820 a tonne from $2,790 and zinc was at $2,450 a tonne from $2,425.
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