Copper prices rose on Thursday to their highest in almost three weeks, weathering dismal U.S. housing data and taking strength from improving demand in other sectors, including transportation.
Three-month copper on the London Metal Exchange was $9,760.25, from $9,727 at the close on Wednesday. Earlier it rose to $9,784, its highest since early March.
“Copper has impressed me,” said Barclays Capital analyst Gayle Berry.
“We had some horrendous housing data out of the U.S....but despite that copper is still holding strong and I think that although you have continued weakness in an important consuming sector for copper, other areas are improving.”
New U.S. home sales plunged in February to hit a record low, but prospects brightened for demand for copper in the automotive sector and anticipated purchases by Japan to rebuild its infrastructure.
Copper is used to make electrical wiring in the auto and housing sector, where it is also used in plumbing.
Aluminium also rose, touching its highest level since September 2008, while lead hovered near peaks last seen in April that year.
FILLIP
Lead touched $2,747.00 on Thursday, its highest in almost three years, lifted by an improving outlook for the metal used in car batteries and given an extra fillip by the launch of Shanghai's new lead contract.
“We've seen a pick up in demand in the U.S. in the past month or so, and whilst you have the positive future impact from increased demand that will come from Japan, we're also seeing some impact from the launch of the SHFE contract,” Berry said.
Lead was $2,717.00 at 13:26 SA time, from a close of $2,716. Strong demand and higher electricity costs helped hoist energy-intensive aluminium, used in auto parts and packaging, to hit $2,651.00, before it trimmed gains to $2,638.
“If you look at the demand picture for aluminium it's incredibly positive,” Berry said. “And longer term as well the question marks over the role of nuclear in the energy mix is certainly helping the back end of the aluminium curve.”
The nuclear crisis in Japan is seen lifting power costs as governments rethink energy policies, and the conflict in the Middle East has propelled crude oil to 2-1/2 year peaks.
A Reuters poll shows brisk demand growth and soaring energy costs supporting aluminium this year, but high inventories and prospective oversupply could temper exuberance.
Aluminium inventories remain close to record highs, climbing 14,425 tonnes to 4,608,875 tonnes, data showed on Thursday, although much of the material is tied up in financing deals.
Tin rose to $31,400, from a last bid $30,925, while zinc was $2,418.5 from $2,424 at Wednesday. - Reuters