Copper climbs on weak U.S. dollar


LONDON - Copper added more than 2 per cent to hit one-week highs on Friday as the dollar eased and inventories dipped but concern over demand due to the global economic crisis capped greater gains.


Investors bemoaned thin trading levels however, with market holidays across Asia and Europe, and a holiday in Britain on Monday.


By 0941 GMT, copper for three month delivery on the London Metal Exchange rose to $4,538 (U.S.) a tonne from $4,431 at the close on Thursday and compared with a session high at $4,550.


A weaker U.S. currency makes metals priced in dollars less expensive for holders of other currencies.


"Volumes are very light," said Steve Hardcastle, analyst at Sucden Financial. "But there was another big stock withdrawal, and there is the weak dollar too."


Prices of the metal used in power and construction added almost 9 per cent in April, buoyed by a rise in cancelled warrants - already earmarked for delivery - on stocks in LME warehouses. Analysts believe the majority of this material is heading for China.


On Thursday, cancelled warrants were 83,100 tonnes from 84,000 tonnes the day before, accounting for about 20 per cent of total LME inventories which fell 7,075 tonnes to 398,700 tonnes.


LME inventories in the red metal have fallen about 25 per cent or around 140,000 tonnes since late February.


"It all adds up to metal flowing into China and no one really knows the percentage of stockpile and the percentage of consumption," said Mr. Hardcastle.


But concern about supplies in the near term have pushed the metal into a $6 to $8 a tonne backwardation - premium for cash material over the three-month contract - compared with a discount of $40 a tonne at the end of March.


The market was little-affected by Chile's Codelco, the world's top copper miner, which said it produced 371,000 tonnes of the metal in the first quarter of 2009, up 6.9 per cent from the same period last year thanks to output from the Gaby mine.


Aluminum gained $27 to a $1,521. LME stocks for the metal, used in transport and packaging, jumped 6,075 tonnes to a new record of 3.79 million tonnes.


On Thursday, aluminum cancelled warrants were at 46,000 tonnes compared with 10,575 tonnes on Jan. 12.


Also on the previous day, Chrysler LLC filed for bankruptcy and announced an industry-changing deal with Fiat.


"It's a bit quiet after a lot of stuff out yesterday," said John Meyer an analyst at investment bank Fairfax.


"The Chrysler bankruptcy lifts a lid on some uncertainty. Ironically its a positive because it means other car makers are much better able to plan for their market."


"While the UK and U.S. continue to suffer economically however, there is a sense that the rest of the world is less effected by the credit crisis."


Chinese manufacturing gained further momentum last month, a survey showed on Friday, adding to tentative evidence from around the world that the global economy may soon be on the path to recovery. Also on the macro front, a flurry of U.S. data will be released later today, including automakers' April sales numbers.


Steel making ingredient nickel traded at $11,875 from $11,650 while battery material lead was at $1,355 from $1,331.


Worries lead supplies persist, due to a dominant position controlling more than 80 per cent of cash warrants on LME stocks reflected in the premium for cash material over the three-month contract.


Zinc gained to $1,470 a tonne from $1,425 and tin edged up to $12,550 from $12,450.


Earlier tin hit $12,650 but worries about supplies reflected in the premium for cash over three-month contracts, last indicated at $200 to $300 backwardation.