LONDON -- Copper surged close to its
seven-month high Friday, fueled by expectations that a robust
Chinese economy will boost demand for base metals and on further
supply tightness looming in Indonesia.
London-listed miners like Vedanta Resources,
Kazakhmys and Xstrata rose more than 2 percent,
driven by stronger metal prices.
Copper for three-months delivery on the London Metal
Exchange touched a session high of $8,039 a tonne before
closing at $7,955, up 1.7 percent from its close Thursday.
Strong demand from China, dwindling stockpiles and concerns
about possible supply disruption lifted copper to $8,100 earlier
in the week, its highest level since Sept. 7. The all-time high
was $8,800, reached last May.
"China worries have receded, and that's why we will see a
firm end to the week," an LME trader said.
Story Continues Below
In New York, most-active July copper settled with a
gain of 2.60 cents to $3.6210 a lb on the New York Mercantile
Exchange's COMEX division, after dealing in a session range
between $3.57 and $3.6605.
Base metal prices fell Thursday after China's booming
11.1 percent growth rate escalated worries about a possible rate
rise. But today sentiment was more upbeat.
"China is looking set to deliver another year of extremely
strong metals demand growth even if there are further tightening
measures. I do not think that changes their story," commodities
analyst Adam Rowley at Macquarie Bank said.
INDONESIA SUPPORTS
The booming Chinese economy spurred speculation that the
central bank would soon raise official interest rates by a 0.27
percentage point in the coming days or weeks, analysts said.
Even in the event of such a move, demand from China would be
enough to support the copper market.
The copper market remains tight as inventories in
LME-registered warehouses fell almost 22 percent since early
February to stand at 169,075 tonnes on Friday — less than four
days of global consumption.
With the market sensitive to news about supply disruptions,
workers protesting at Indonesia's Grasberg, one of the world's
biggest copper mines, offered further support to prices.
"The labour dispute at Freeport-McMoRan's Grasberg
mine in Indonesia has caused a fall of capacity utilisation to a
mere 20 percent. Thus, the price of copper appears to be
well-supported," Dresdner Kleinwort said in a research note.
Freeport-McMoRan Copper and Gold's giant Grasberg copper
mine is running well below capacity, according to the Indonesian
government, and workers have said they are prepared to continue
their protests for a month if necessary.
Tin rose 1.5 percent to $13,650/13,675 after the
sharp losses earlier in the week on Indonesia approving export
permits for two more smelters. One of the new licences was
awarded to PT Koba Tin, Indonesia's second-biggest producer.
"Tin sold off heavily the previous day on the back of the
announcement from Indonesia. We see a rebound after that,"
Rowley said.
Nickel rose 2.5 percent to $48,700 while aluminium eased by $3 to $2,842.
Daily average primary aluminium output in March, excluding
China, rose to 67,100 tonnes compared with 66,800 in February
and 65,300 in March 2006, provisional figures from the
International Aluminium Institute showed.
Zinc was $80 higher at $3,680 while lead
firmed to $1,980 from Thursday's $1,930.
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