Copper rose on Wednesday, supported by supply concerns, with investors also taking comfort from US data that showed a rise in consumer spending and a fall in the number of people claiming unemployment benefits. Three-month copper on the London Metal Exchange was last quoted at $8,250/8,251 a tonne, up from Tuesday's close of $8,140. Copper, used in power and construction, has fallen some 8 percent from record highs of $8,966 hit earlier this month.
Stainless steel material nickel rallied by over 4 percent at one point on fund buying. The dollar turned negative versus the euro and a basket of leading currencies following the release of US economic data that pointed to a moderate strengthening in economic activity, which raised risk tolerance. US durable goods orders unexpectedly fell in October, but jobless claims also fell more than expected in the latest week. Consumer spending rose and a key inflation gauge hit a record low.
"To have slightly stronger consumer spending is always positive and the low inflation has vindicated the Fed's stance on monetary easing, which is likely to weaken the dollar again over the long run," said Credit Agricole analyst Robin Bahr. Nickel prices rallied as the metal broke through key chart points, which sent a buy signal to funds. The 100- and 200-day moving averages are key chart levels, closely watched by funds that trade on technical analysis, as was the $22,000 level.
On the fundamental side, prospects for the laggard LME metal was also brightening as inventories in Asian locations fall, said Standard Bank analyst Leon Westgate in a note. "Stocks in Asian locations have started to come back under pressure...Looming additions to production capacity are on the way, however any delays in that mine supply, may see a short term...aggressive rally in prices early next year."
In South Korea and Singapore, nickel stocks have fallen since mid-month, although total inventories remain close to five-month highs. Nickel finished at $22,500 versus $21,600, having hit a one-week high at $22,549. In copper, the world's No 3 copper mine, Collahuasi, on Wednesday said over 200 workers had abandoned a strike that has dragged on for some 20 days, underlining supply concerns.
Also, data from the International Copper Study Group showed demand for copper outstripped supply by 363,000 tonnes in the first eight months of the year. Across other metals, aluminium, used in transport and packaging, ended at $2,259 versus $2,255 a tonne. Ormet Corporation, an independent US producer of aluminium said it would restart smelter capacity, adding around 80,000 tonnes of metal next year. Zinc, used in galvanising, closed at $2,122 from $2,085 a tonne. Lead, used in the battery sector, was at $2,222 from $2,186.5 a tonne. Tin, used in electrical solder, finished at $24,300 versus $23,900.