Copper rises on upbeat US housing data

COPPER has risen to a 10-month peak, as stronger-than-expected US home sales data encouraged more confidence in the global economy and supported expectations of a further rally. “We're definitely seeing some favourable numbers,” said Tom Hartman, broker with Altavest Worldwide Trading in Mission Viejo, California. “There's just an overall improvement in economic sentiment.” “We can certainly say we are getting close to resistance levels and the market is overextended, but it does not mean we can't surge another 3 to 5 per cent based on this momentum.” Copper for September delivery on the New York Mercantile Exchange's COMEX division rose US5.70 cents to close at $US2.7955 a pound, near a session peak at $US2.7990 range, its loftiest level since October 1. On the London Metal Exchange (LME), copper for three-months delivery ended up $US50 at $US6050 a tonne. After hours, the metal rallied to $US6144.50, a level last seen in early October. KEY COMMODITY PRICES: oil, gold, base metals, livestock and wheat Copper, used in power and construction, got a boost from news that pending sales of previously owned US homes rose at a faster-than-expected pace in June. The housing data followed positive manufacturing data from around the world earlier this week that bolstered the view that the global economy was pulling out of a steep downturn. “Everything seems to be in place for continued strength,” said Joel Crane, analyst at Deutsche Bank. “Equity markets are a good physical manifestation of growing sentiment that the economy is improving faster than originally thought.” US equities edged lower in the latest session as investors took profits after a rally saw the benchmark S&P 500 gain 48 per cent since early March. A $US2 to $US5 premium for cash copper versus the three-month contract suggest some supply tightness in the near term. But that compares with the $US21 premium in mid-July, when LME copper stocks started rising. Latest LME data showed copper stocks rose another 3775 tonnes, but at 285,900 tonnes in total they remain well below levels of around 500,000 tonnes in February. “(The premium) is one of the reasons we've seen LME stocks pick up but that pick up has not had the normal impact on prices i.e. rising stocks falling prices,” Societe Generale analyst David Wilson said. “That's largely because investors are looking at the outlook for next year and betting on a sharp rebound in metals demand. They're not looking at the short term.” Aluminium ended up $US20 at $US1990 a tonne. In after hours trade it hit $US2019, its highest since early November. The metal used in transport and packaging has gained more than 25 per cent this year partly because of a shortage of nearby supplies. About 70 per cent of the record 4.56 million tonnes of LME stocks were seen tied up in financing deals to release cash for producers. Zinc closed at $US1853 a tonne from $US1845, battery material lead at $US1921 from $US1950, nickel at $US19,375 from $US18,830, having earlier hit $US19,598 in late business, its highest since early last September. Tin was bid at $US14,750 a tonne from $US14,950. Traders remained concerned about a large position holder which has bought tin for delivery in September and sold it for December. Worries that funds will be caught short of the metal pushed the premium for the September contract over the December contract to $US1500 a tonne on Friday. The premium traded at $US950 and $US1000 a tonne in the latest session.