Copper rockets to record $10,000 per tonne

3rd February 2011, Comments 0 comments

Copper hit a record price of $10,000 per tonne on Thursday on the back of growing worldwide economic optimism and concerns about the impact of an Australian cyclone on stretched global supplies.

In trade on the London Metal Exchange, copper for delivery in three months' time hit exactly $10,000 per tonne, before pulling back to stand at $9,941.

"Copper prices continue to soar, reaching another milestone this morning of $10,000 a tonne," said Ian O'Sullivan, an analyst at traders Spread Co. in London.

"Cyclone Yasi in Australia has added pressure to copper prices, with (mining company) Xstrata evacuating the largest copper mine in Australia ahead of the storm.

"But the key drivers have been the strong PMI manufacturing numbers out of the US, Europe, and especially China, the world's largest consumer of copper."

Australia's biggest cyclone in a century shattered entire towns, pummelling the coast and churning across the country on Thursday, terrifying locals but causing no confirmed fatalities.

Shaken residents emerged to check the damage after Severe Tropical Cyclone Yasi hit land at around midnight (1400 GMT Wednesday), packing winds of up to 290 kilometres (180 miles) per hour in a region still reeling from record floods.

Anglo-Swiss mining giant Xstrata evacuated its Mount Isa and Cloncurry mines as the storm headed further inland, after being downgraded to category one.

Added to the mix was upbeat economic data in China, and in Western industralized nations that comprise the Organisation for Economic Co-operation and Development (OECD) region.

"The final push (to $10,000 for copper) was fuelled by global recovery optimism in general and Tuesday's bullish manufacturing PMI (pirchasinf manager's index) releases in particular," said SEB commodities analyst Filip Petersson.

"These indicated that the OECD recovery is accelerating while the Chinese economy remains stable.

"Thus, an OECD copper demand recovery from very low levels in combination with continued Chinese demand strength looks like the most likely scenario going forward," he added.

Copper is being propelled by tight global supplies of the industrial metal, which is used in plumbing, heating, electrical and telecommunications wiring.

Meanwhile on Thursday, oil surged past $103 per barrel, lifted also by heightened concerns about ongoing unrest in Egypt.

"Commodity prices remain in an uptrend at the moment given resilient economic growth from the world's leading commodity demander China," added VTB Capital economist Neil MacKinnon.

"In addition, the global economy started 2011 on a robust note according to the latest surveys of manufacturing for the US and German economies."

In the coming week, meanwhile, copper could strike new heights as China returns from its holiday break, according to O'Sullivan.

"Prices could go even higher next week when the Chinese return from New Year's celebrations, and longer term, there is a real possibility of seeing $11,000 a tonne in the coming months."

Chinese stock markets are currently closed for a week-long public holiday, with trading due to resume on February 9.

© 2011 AFP

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