Copper rose to a four-month high on Thursday, spurred by hope the International Monetary Fund will boost its resources to help combat the euro zone debt crisis, and optimism that demand for metal will hold up as US economic prospects brighten.
Benchmark copper on the London Metal Exchange (LME) rose 1.7 percent to $8,378.75 a tonne by 12:01 SA time, from a close of $8,235 on Wednesday.
Earlier in the session the metal used in power and construction rose to its highest level since Sept. 20 at $8,410 a tonne.
“The market is trading on a stronger footing today after gains in equity markets and positive macroeconomic data from the United States,” said Daniel Briesemann, analyst at Commerzbank, referring to upbeat US factory output data released on Wednesday.
“We are continuing to see robust global demand against the backdrop of a debt crisis in the euro zone... and that is remarkable.”
Financial markets were boosted by news the IMF is seeking to more than double its war chest by raising $600 billion to help the euro zone pull out of its two-year-old sovereign debt crisis.
Also helping gains in metals prices was a stronger euro, which hit a two-week high against the dollar. A weak dollar makes commodities priced in the US unit cheaper for holders of other currencies.
Optimism gathered pace that Greece would reach an agreement with its creditors as the indebted country enters a second day of bargaining on a crucial bond swap deal.
“The market is more focused on the uncertainty about the Greek crisis rather than fundamentals (for metals). We still have to wait and see how the negotiations regarding the Greek debt plays out,” Briesemann said.
Copper prices fell by around 21 percent last year, the first annual drop since 2008, as an uncertain global economic outlook raised fears about the metal's demand prospects.
The metal is trading 10 percent higher so far this month.
FALLING STOCKS
Copper stocks in LME-registered warehouses continued to show a falling trend, dropping by 1,300 tonnes to a fresh 13-month low of 351,200 tonnes in industry news, Pan Pacific Copper, Japan's biggest copper smelter, said on Thursday it had recently received copper concentrate shipments from Freeport-McMoRan Copper & Gold Grasberg mine in Indonesia after a three-month strike at the mine ended in December.
“Similar to other raw materials, the focus is currently on supply related news. In this context, copper stands out in particular,” Credit Suisse said in a note.
Aurubis AG, Europe's largest copper producer, warned of slowing demand and price volatility on Thursday although its profits were up 84 percent in its last financial year.
“Price volatility is to be expected ... We expect uncertainty in the further demand trend in our copper product sales,” the company said, while also saying there was good cause to expect metal prices to remain high.
In other metals, aluminium rose to $2,225 from a close of $2,204 a tonne on Wednesday.
Zinc, used in galvanising, climbed to $2,027 from a close of $2,001, while tin was at $21,950 from $21,780.
Battery material lead rose to $2,161.25 from $2,139 and stainless steel ingredient nickel climbed to $19,743 from a close of $19,495. - Reuters