Copper at a 16-month high on upbeat manufacturing and car sales data

COPPER hit a 16-month high overnight, with New York prices hurdling above the $US3.50 a pound level, after upbeat manufacturing and auto sales data this week added to indications of economic improvement and raised prospects for better industrial metals demand. Aluminium rallied on supply concerns as harsh cold weather hit parts of China and health concerns over lead production in China boosted lead and zinc to multi-month highs. At the New York Mercantile Exchange's COMEX division, copper for March delivery rallied to a session peak at $US3.52 a lb, the highest level for the red metal on the spot daily third position chart since August 2008. The benchmark contract settled up US8.10c at $US3.49. Benchmark copper for three-months delivery on the London Metal Exchange closed up $US175 at $US7660 a tonne, after hitting another 16-month top at $US7,742. “Today is mostly a macro play again,” Michael Widmer, an analyst at Bank of America said. “Some of the car sales data from the United States wasn't too bad, and manufacturing data wasn't too bad either. “People are increasing exposure to metals at the moment.” Data on Tuesday showed a surge in new factory orders, offering assurance the economic recovery remained on track. Later that day, the outlook for metals demand got a boost from figures showing US auto sales ended 2009 on an upswing. There also was strong manufacturing data from the United States and China this week. “Good news, bad news, we're still going up,” Craig Ross, vice president of Chicago-based ApexFutures.com said, referring to the red metal's parabolic price gains throughout 2009 and at the start of the new year, even as fundamental support from labour action in Chile faded. News that Chile's Codelco, the world's No 1 copper producer, had resumed operations at its massive Chuquicamata complex after workers voted to end a strike failed to stem the bullish momentum. “This is a bull market and it looks like the $US4.00 level is the next stop ... probably sometime in this first quarter,” he said. But analysts said copper and aluminium may come under some pressure as their weightings are reduced in the Dow Jones UBS Commodity Index next week. Aluminium ended at $US2385 from $US2302. The metal used in transport and packaging earlier hit $US2394, its highest since October 2008, as analysts said northern hemisphere winter weather conditions in China were supporting prices. “The snow storms are likely to generate concerns over lack of availability of metal,” said Daniel Major, an analyst at RBS Global Banking & Markets. Zinc closed at $US2718 from $US2,575, earlier hitting $US2725, its highest since early March 2008. Battery material lead ended at $US2680 from $US2523, having touched $US2,690, its highest since early May 2008. Both metals, which are often produced together, were also boosted by market talk of renewed health concerns over lead production in China, which one media outlet said had led to the closure of a battery plant in the country. “They have closed this one plant, and you can be absolutely certain they are going to look at others,” John Meyer, an analyst at investment bank Fairfax said. “Anything like this tends to lead to lead producers having problems.” Fairfax estimates that China will produce about 1.724 million tonnes of lead this year, which is 19 per cent of annual global production. A fresh rise in LME copper stocks reminded investors that demand outside of China remained weak and Chinese purchases have cooled. China is the world's top consumer of the metal. Inventories climbed 2050 tonnes to a nine-and-a-half month high of 507,400 tonnes. Tin was untraded in closing LME rings but last bid at $US17,800 from $US17,350, but earlier hit a 15-month high at $US17,825, while nickel ended at $US19,155 from $US18,710.