METALS-Copper at 27-month top on dollar, strong demand

* Chinese apparent copper consumption rose in Sept

* Lead and zinc hit 9-month tops on China shutdowns

* Coming up: U.S. consumer confidence data on Tuesday
(Recasts, updates prices, market activity to New York close; adds second
byline, dateline, previously LONDON)

By Chris Kelly and Michael Taylor

NEW YORK/LONDON, Oct 25 (BestGrowthStock) – Copper scaled 27-month highs on Monday,
as the weak dollar/long commodities trend resurfaced after the weekend G20
meeting and demand prospects brightened on Chinese trade data and news of
JPMorgan’s interest in an exchange-traded-product.

“I think what we are seeing is speculative buying and the renewal of the
uptrend in metals in general,” said Bill O’Neill, partner of LOGIC Advisors in
Upper Saddle River, New Jersey.

“With the dollar down and hitting new lows against some currencies, metals
are back in the trend.”

Copper for December delivery (HGZ0: ) on the COMEX metals division of the New
York Mercantile Exchange jumped 6.60 cents, or 1.7 percent, to end at $3.8630
per lb, a new closing high for the third-position futures contract since July
3, 2008.

On the London Metal Exchange (LME), benchmark copper for three-months
delivery (CMCU3: ) peaked at $8,549 a tonne, another high dating back to July
2008, before ending up $183 at $8,518 a tonne.

The dollar fell broadly on Monday as a Group of 20 agreement to shun
competitive currency devaluations pointed to a status quo in currency markets
and was taken as a green light for investors to resume dollar selling. [USD/]

“Not only does copper have the benefit of speculative demand for
commodities and the dollar-related demand for commodities, but it also has a
good solid underlying fundamental base to go along with it,” O’Neill said.

Chinese September trade data reflected that view.

Despite a 7.5 percent decline in month-over-month refined copper imports,
China’s apparent demand for the metal rose in September, according to Reuters
calculations based on official Chinese data released earlier. [ID:nTOE62L026]

“China may have slowed slightly, but it still remains very buoyant,” said
O’Neill. “One of the mistakes people have made in copper going back over the
past year is that they have underestimated global demand.”

News that JPMorgan Commodity ETF Services (JPM.N: ) had registered to launch
an exchange-traded product (ETP) for copper in a filing late last week with
U.S. regulator the Securities and Exchange Commission provided additional
upside momentum to the rally. [ID:nLDE69O174]

“A copper ETF could very much tighten this market,” said Bart Melek, Global
Commodity Strategist with BMO Nesbitt Burns in Toronto. “We’re already
expecting nearly a 400,000-tonne deficit next year, and now we are having
issues at Colluhuasi so it should be very, very supportive.”

Workers at Chile’s giant Collahuasi mine will vote on whether to strike
this week. [ID:nN21269017]


The supply-side picture remained tight with the latest data showing LME
copper stocks fell 450 tonnes to 368,375 tonnes, down around a third from a
six-and-a-half-year high of 555,075 tonnes seen in February. (0#LME-STOCKS: )

The discount for nearby cash copper (CMCU0: ) over the three-month benchmark
(CMCU3: ) has narrowed from around $20 a tonne on Oct. 20 to $16 a tonne
currently, indicating spot supply is getting harder to come by. Graphic: )

LME zinc (CMZN3: ) and lead (CMPB3: ) extended Friday’s gains to touch their
highest levels in nine months on Monday, both at $2,600. Zinc later ended up
$53 at $2,565 a tonne and lead closed $55 firmer at $2,585.

The metals continued to benefit from reports on Friday that China’s
third-largest zinc producer closed its lead and zinc smelter completely on Oct.
21 to comply with a provincial government pollution investigation.

There is speculation the smelter, which has a total designed capacity of
330,000 tonnes of lead and zinc a year, will be closed till the end of the

Among other industrial metals, aluminum (CMAL3: ) was untraded at the close
but last bid at $2,372 a tonne from Friday’s close at $2,365. Tin (CMSN3: )
climbed $500 to end at $26,900 and nickel (CMNI3: ) added $375 to $23,600.
Metal Prices at 1840 GMT
COMEX copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T
Metal Last Change Pct Move End 2009 Ytd Pct

COMEX Cu 385.45 5.75 +1.51 334.65 15.18
LME Alum 2365.00 0.00 +0.00 2230.00 6.05
LME Cu 8465.00 130.00 +1.56 7375.00 14.78
LME Lead 2565.00 35.00 +1.38 2432.00 5.47
LME Nickel 23400.00 175.00 +0.75 18525.00 26.32
LME Tin 26600.00 200.00 +0.76 16950.00 56.93
LME Zinc 2555.00 43.00 +1.71 2560.00 -0.20
SHFE Alu 16775.00 225.00 +1.36 17160.00 -2.24
SHFE Cu* 64610.00 1820.00 +2.90 59900.00 7.86
SHFE Zin 20950.00 680.00 +3.35 21195.00 -1.16
** Benchmark month for COMEX copper
* 3rd contract month for SHFE AL, CU and ZN
SHFE ZN began trading on 26/3/07

(Additional reporting by Maytaal Angel in London; Editing by David

METALS-Copper at 27-month top on dollar, strong demand