Copper leaps over 7% ahead of index re-jig

Print this page Posted on : 01-07-2009 by recycleinme.com

London, Jan. 6

Copper jumped more than 7 per cent on Tuesday on buying ahead of an annual re-rating by major commodity indices, but the rally is expected to be short-lived as demand concerns remain.

The Dow Jones AIG annually recalculates the weightings for the individual commodities in its index and is set to raise the weighting for copper traded on the New York Mercantile Exchange's COMEX division. The rebalancing takes place from January 9 to 15.

"The arbitrage effect means that COMEX rallying significantly will also drag up (LME) copper," Mr Leon Westgate, an analyst at Standard Bank, said.

Three-month copper on the London Metal Exchange rose as much as 7.2 per cent to $3,420 a tonne, the highest since December 4. It traded at $3,369 a tonne in official rings.

Copper for March delivery on COMEX is up over 16 per cent from its December 26 session trough.

The weak outlook for global demand means metal prices are unlikely to hold on to any gains.

Stocks in LME warehouses rose 1,450 tonnes to 343,500, the highest level since February 2004.

Aluminium gains

All the industrial metals were up, with aluminium rising to $1,598 a tonne from $1,548 even as inventories continued to climb. Aluminium stocks rose 11,875 tonnes to 2.35 million tonnes, the highest in over 14 years.

Nickel rose as high as $13,500 a tonne from $12,850 and last traded at $13,450. Zinc was at $1,310 from $1,300. It earlier hit $1,335 a tonne, the highest price since October 15.

Lead and tin were boosted by short covering, with lead rising to $1,150.5 from $1,120. Tin rose as high as $12,300 a tonne, from 11,500 a tonne, and was last bid at $11,950.

Source : Business Line