Copper prices jumped on Tuesday to their highest in more than two weeks as the dollar sank against the euro, and investors eyeing strong growth in Asia and bullish inventory data piled into industrial metals. Aluminium touched $2,134 a tonne, the highest since February 3 and nickel hit a six month high of $20,335 a tonne.
Benchmark copper closed at $7,144 a tonne compared with $6,870 at the close on Monday. Earlier on Tuesday the metal used in power and construction hit $7,138 a tonne, the highest since January 28. The euro had its biggest one-day gain versus the dollar since the end of November as traders bet the single currency had slipped too far in recent weeks over worries about Greece's public finances.
A weaker US currency makes dollar-priced commodities cheaper for holders of other currencies. "The rest of the eurozone are putting pressure on Greece to do more and tidy up its act. That's giving the market a bit of heart on the euro," said David Thurtell, an analyst at Citi.
Demand growth for commodities has, for some years now, been led by emerging economies such as China, the world's largest consumer of industrial metals, which is expected to grow by more than 11 percent in the first quarter. Chinese markets are due to reopen next week after this week's New Year break. "The demand picture out of China is still robust," said Daniel Smith, an analyst at Standard Chartered.
Stocks of copper in LME warehouses stand at 549,900 tonnes, their highest since October 2003. That is a negative, but the market is looking at cancelled warrants - material already earmarked for delivery. Copper cancelled warrants at above 16,000 tonnes from 3,625 tonnes on February 8 are mostly concentrated in Korea, and analysts say this material is probably heading for China.
Cancelled warrants on aluminium are at 295,175 tonnes versus 256,550 on February 8, a small number compared to stocks near record highs at above 4.587 million tonnes. Aluminium, used in transport and packaging, closed at $2,131 a tonne from Monday's close of $2,054, while stainless steel material nickel closed at $20,325 from $19,350.
Stocks of nickel fell to 164,856 tonnes on February 15 from 166,356 on February 10. Nickel prices over the same period are up about 10 percent. Material tagged for delivery nearly doubled to 5,460 tonnes on February 15 from 2,394 on February 8. Most of the new cancelled nickel warrants were in Singapore.
Higher prices have triggered a debate about strength of demand for stainless steel, which consumes about two-thirds of global nickel supply. J.P. Morgan said in a note it could not see a material trend improvement in nickel melt rates being sustained, even with low commercial inventories of stainless steel at end users.
Battery material lead closed at $2,298 a tonne from Monday's last bid at $2,180, jumping nearly 6 percent to hit an intraday high of $2,308.75, its highest in nearly a month. Zinc was at $2,337 from $2,200 on Monday and rose some 6 percent to hit a day's high of $2,335. Tin was last quoted at $16,700/16,725 from $16,495.