Copper pushed well above $10,000 a tonne to a record high on Friday, driven by encouraging employment data in the United States that backed views of a healthier 2011 demand outlook. Prices of the metal, often viewed as a barometer for economic conditions, posted their biggest weekly gain in nine weeks, as investment demand kept growing in anticipation of expected supply shortages and market deficits this year.
Copper pushed higher even after the US data showed a meagre 36,000 jobs were created last month, as traders focused on the steep decline in the jobless rate and the significant jump in manufacturing jobs. The data showed US manufacturing jobs expanding at their fastest rate since August 1998.
"Sluggish job creation figures were balanced out by a larger than expected fall in unemployment which has kept the base metals bullish momentum unchanged," said Kamil Wlazly, a metals analyst at Metal Bulletin Research. London Metal Exchange (LME) copper for three-months delivery closed up $120 at $10,050 a tonne, after touching a record high $10,100.
The benchmark COMEX March contract settled up 3.50 cents at $4.5795 per lb, after hitting its own record at $4.6140. Copper, widely used in manufacturing and construction, should enjoy strong demand due to improving economic conditions in the developed world and a strong phase of industrialisation still underway in emerging economies like India and China.
"It is being construed as at least a reasonably friendly report," said Sterling Smith, an analyst for Country Hedging Inc in St. Paul, Minnesota The Friday jobs report added to a steady stream of data this week, including accelerating global manufacturing activity, rising US factory orders, and solid growth in the US services sector.
Copper's rally helped tin rise to a record high at $31,300 a tonne. Tin for three-months delivery closed up $655 at $31,200. "This buying has to be speculative buying. It is fresh fund buying," said Alex Heath of RBC Capital Markets. "Once you go through record highs you attract fresh money immediately. It is the same pattern for all metals."
Trade was thin as the Lunar New Year holidays that started on Wednesday shut markets in top base metals consumer China. Stocks of copper at LME warehouses last fell 325 tonnes to 394,150 tonnes, a small decline but a bit of respite after a recent string of inventory builds dating back to early December.
Still, conditions remained tight and news of curtailed production at Xstrata's copper and nickel plant in southern Norway only added to that tightness. Antofagasta Minerals, one of the world's top copper producers, sees copper hovering at record levels above $10,000 a tonne during most of 2011 and 2012 due to a widening supply deficit.
But, Xstrata does plan to restart its Mt Isa copper mining and smelting division in the eastern Australian state of Queensland a day after suspending operations as a precaution from Cyclone Yasi. Australia's second-biggest nickel refinery and largest zinc mine are also set to reopen by the weekend after both were shut down ahead of Yasi.
Nickel climbed $310 to end at $28,350 a tonne. Nippon Steel Corp and Sumitomo Metal Industries planned to create the world's No 2 steelmaker, fanning expectations of further consolidation in the industry.