Copper rose on Thursday to hit a five-month high as the euro gained versus the dollar after Greece confirmed it had clinched a deal for emergency aid needed to ensure it avoids a disorderly default.
A stronger euro makes dollar-priced metals cheaper for European investors.
Greece’s agreement to adopt new austerity measures, confirmed by European Central Bank President Mario Draghi, should pave the way for a 130 billion euro ($A160 billion) aid package for the troubled country.
Still, details were scarce and investors wondered whether it would be enough to secure the funds as well as what contribution the European Central Bank will offer in the restructuring of Greece’s debt.
Benchmark copper on the London Metal Exchange (LME) ended at $US8,760 a tonne from a close of $US8,580 on Wednesday, having earlier hit $US8,765, its highest point this year and a level not seen since mid-September.
“The important thing is that an agreement has been reached for Greece. This should support risk appetite in general, but we’ve had a good run recently, so we might start to see some profit-taking,” said Danske Bank analyst Arne Lohmann Rasmussen.
He added: “In general the focus on Greece is now smaller. People are seeing stronger growth in the US and seeing a China that is slowing but not heading for a hard landing, so in our view risk-on mode can continue.”
US data out earlier showed new claims for unemployment benefits unexpectedly fell last week, reinforcing hopes that the world’s largest economy is slowly emerging from a slump and will soon start consuming more copper.
On the downside, however, data out overnight showed inflation in China spiked to a consensus-busting 4.5 per cent in January, breaking a five-month softening trend and sparking worries that monetary easing might not occur soon.
“The Chinese New Year has been cited by many as distorting the figures, which up until now had shown five consecutive months of steady declines. Last year, the Chinese New Year fell in February, so we would expect a commensurate increase in this year’s February numbers before drawing any conclusions,” Standard Bank said in a note.
China is the world’s top copper consumer, accounting for around 40 per cent of refined copper demand last year.
In industry news, global miner Rio Tinto reported a six per cent fall in second-half profit before $US9.3 billion ($A8.65 billion) in writedowns mainly on its aluminium business, but appeased investors with a massive dividend hike.
Aurubis AG, Europe’s largest copper producer, will continue to consider acquisitions of copper smelters or product makers, its new CEO said.
Aluminium ended up at $US2,287 a tonne, from a close of $US2,253 on Wednesday.
Data from the LME showed the ratio of cancelled warrants to total stock for aluminium held in LME-registered warehouses rose to 24.55 per cent, with large cancellations out of Vlissingen.
“Aluminium has been the only base metal to rally this morning (but) over the past few days, open interest has continued to decline suggesting the market still seems wary about getting long just yet,” said Standard Bank.
Zinc, used in galvanising, closed up at $US2,160 a tonne from $US2,115, while tin ended flat at $25,400.
Tin prices were cushioned by news that shipments out of top exporter Indonesia fell 27 per cent on the year.
Battery material lead ended at $US2,222 a tonne from $US2,181, and stainless steel ingredient nickel closed at $US21,540 a tonne from $US21,500.
Metal Prices at 1736 GMT (0436 Friday AEDT)
Metal Last Change Pct Move End 2009 Ytd Pct
move
LME Alum 2289.00 36.00 +1.60 2230.00 2.65
LME Cu 8755.00 175.00 +2.04 7375.00 18.71
LME Lead 2222.00 41.00 +1.88 2432.00 -8.63
LME Nickel 21505.00 5.00 +0.02 18525.00 16.09
LME Tin 25400.00 0.00 +0.00 16950.00 49.85
LME Zinc 2160.00 45.00 +2.13 2560.00 -15.63
SHFE Alu 16180.00 -80.00 -0.49 17160.00 -5.71
SHFE Cu* 61070.00 -320.00 -0.52 59900.00 1.95
SHFE Zin 16145.00 -125.00 -0.77 21195.00 -23.83
** 1st contract month for COMEX copper
* 3rd contract month for SHFE AL, CU and ZN
SHFE ZN began trading on 26/3/07
