US copper futures hit a new record high near $4.50 per lb on Monday in the first trading day of the New Year, extending 2010’s 33 percent rally on continued signs of US economic improvement and sustainable growth prospects in China.
By 1036 GMT, COMEX copper for March delivery was up 0.40 cent at $4.4510 per lb, moving between $4.4315 and a new all-time high of $4.4980.
London and Shanghai markets were shut.
The economically sensitive base metal maintained momentum near record peaks after data showed the US manufacturing sector grew for a 17th straight month in December.
Additionally, US construction spending rose to its highest level since June.
“(Copper) is showing investor sentiment about the economic outlook going forward is quite good,” said Matthew Zeman, head of trading with LaSalle Futures Group in Chicago.
“If this data stream stays positive, it will continue to go up.”
Copper’s bullish tone was set in the overnight session after data showed Chinese factory inflation cooled in December as manufacturers expanded more slowly after a period of strong growth.
The official Chinese purchasing managers’ index edged down in December and fell short of forecasts, easing concerns that rising inflation would lead the government to take more steps to control growth.
China’s PMI data suggests the cooling measures — rate rises and reserve requirement increases — are working, which, market watchers said, may mean less harsh moves this year will be needed to tame rising prices.
The moderation in China to more sustainable levels and the gathering pace of expansion in South Korea were adding to investor confidence toward the market.
“We are still positive that growth in Asia will continue with the caveat that inflationary pressures don’t force governments to undertake tightening measures beyond what the market is expecting,” Chen Xin Yi, assistant vice president at Barclays Capital in Singapore, said.
That bodes well for commodity markets — the top flight asset class in 2010 with gains of 17 percent as measured by the 19-commodity Reuters/Jefferies CRB index — with analysts expecting supply tightness in a range of markets from copper to wheat to underpin further gains.
Copper ended 2010 around record highs just short of $10,000 a tonne on the London Metal Exchange (LME). Analysts were looking for prices to rise another 10 percent in 2011 as consumers contend with a shortfall of metal estimated by Barclays Capital at more than 800,000 tonnes or almost 4 percent of forecast output this year.
“Overall, this market is going to continue to move higher. There are concerns right now about supply not being able to keep up with demand as this global recovery continues to gather momentum,” LaSalle’s Zeman said.
Reinforcing that tightness was the closure of Chile’s Patache port terminal which had blocked exports by No. 3 copper miner Collahuasi.
On Monday, a port official told Reuters that the mine had shipped 11,000 tonnes of copper concentrate on Dec. 26 and planned another delivery this week via an alternative port.
“There is limited supply of copper, and there is fund money coming to the market pushing it higher. At the same time, the natural short sellers — the miners — are not playing ball,” a trader with an international bank in Singapore said.