BASE METALS: Copper Up 2.9% As LME Metals Close Higher

Base metals closed higher on the London Metal Exchange Thursday, reversing some of their steep losses from recent sessions as part of a broad rally across the commodity markets.

LME three-month copper ended the day up 2.9% as the euro rallied against the dollar and concerns eased over euro zone sovereign debt and a potential interest rate hike in China.

Precious metals, oil and soft commodities all traded higher throughout the day.

The base metals were boosted in Europe's mid-afternoon trading hours by an upbeat report from the Federal Reserve Bank of Philadelphia, which announced its November index of general business activity came in at 22.5, from 1.0 in October. It had been expected at 4.5. Analysts said the figures are particularly positive for copper, which is used widely in the manufacturing and construction industries.

Meanwhile bargain hunters, and interest from investors who felt the recent selloff had been too severe, also helped propel the metals higher.

"We had opined that the selloff was looking too severe and it would appear that the lower numbers did attract good buying interest," Barclays Capital analyst Gayle Berry said.

But market participants said the metals remain volatile--with many labeling the move higher merely a relief rally--and warned a deeper correction could be on the cards in the sessions ahead.

"We expect prices to remain vulnerable to macro vagaries in the short term, so further pullbacks cannot be ruled out," Berry said.

While macro events are expected to drive price direction, investors continue to eye developments at Chilean copper mine Dona Ines de Collahuasi, where a labor strike has entered its 14th day. The company, which presented an improved final offer late Wednesday, said output from the operations remain normal though.

The mine is one the biggest copper mines in the world and is owned by diversified mining companies Xstrata PLC (XTA.LN) and Anglo American PLC (AAL.LN), each with a 44% stake. A consortium led by Mitsui & Co. (MITSY, 8031.TO) holds the remaining 12%.

 
   Prices in dollar a metric ton. 
3 Months Metal           Bid-Ask       Change from 
                                      Wednesday PM kerb 
Copper                 8425.0-8426.0     Up 235 
Lead                   2315.0-2316.0     Up 51 
Zinc                   2185.0-2186.0     Up 72 
Aluminum               2308.0-2309.0     Up 32.5 
Nickel                21840.0-21850.0    Up 290 
Tin                   25100.0-25200.0    Up 355 
Aluminum Alloy         2195.0-2205.0     Up 35 
Aluminum Alloy-NASAAC  2270.0-2280.0     Up 45

-By Rhiannon Hoyle, Dow Jones Newswires; +44 (0)20 7842 9405; rhiannon.hoyle@dowjones.com

Mitsui (NASDAQ:MITSY)
Historical Stock Chart
From May 2024 to Jun 2024