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Copper vaults to new high

(China Daily/Agencies)
Updated: 2009-10-21 08:26

Shanghai copper rose to near six-week highs yesterday as the dollar fell to its weakest level in 14 months, boosting the appeal of commodities.

The dollar index, a gauge of its performance versus six major currencies, fell as low as 75.103 yesterday on the view rising unemployment will keep US interest rates near zero, making dollar-based commodities cheaper for local currency holders.

The greenback's slide lifted oil above $80 a barrel and gold to near record levels, while global stocks climbed to one-year highs after strong sales numbers from Apple Inc suggested US consumers are spending more.

"The dollar will continue to move lower in the short term, and that's going to support the whole commodity market in terms of the price outlook," said Bonnie Liu, analyst at Macquarie.

While the greenback remains the main catalyst, a slew of US data due later yesterday, including housing starts and building permits for September and weekly retail sales could provide some trading cues.

Shanghai's benchmark third month copper SCFc3 climbed 710 yuan ($103.99) to 50,210 yuan a ton at the close, after rising as high as 50,570 yuan earlier, its loftiest since Sept 9.

Three-month copper on the London Metal Exchange MCU3 rose $12 to $6,477 a ton in early trade, adding to Monday's $225 gain.

Related readings:  Shanghai copper prices fall  Shanghai copper firms up  Market rally lifts Shanghai copper  Shanghai copper recovers

The market mood after the LME was generally optimistic with low consumer stocks, a weaker dollar and Chinese demand seen supporting industrial metals prices into the next year.

"The Chinese seemed to be most bullish, as they see little evidence that demand for metal in the country is slowing, while supply is also becoming a problem," MF Global analyst Edward Meir said in a note. Meir said many of the Western producers were "cautiously optimistic" given the economic uncertainties.

"The merchants and trading companies were, on balance, more negative on the outlook, viewing prices to be quite overbought short-term and overly reliant on Chinese buying instigated mainly by the government," he said.