By Millie Munshi and Anna Stablum
Sept. 8 (Bloomberg) -- Copper futures rose for the fourth straight session and lead climbed to the highest price since May 2008 as the slumping dollar boosted demand for metals as a hedge against inflation.
The dollar fell to an 11-month low against a basket of six major currencies. The greenback has tumbled 13 percent since March 1. Copper has more than doubled this year. Crude oil and gold also jumped today.
“The dollar is playing a huge part in the market,” said William O’Neill, a partner at Logic Advisors in Upper Saddle River, New Jersey. “Hard assets are king. People are buying based on inflation fears.”
Copper futures for December delivery rose 11 cents, or 3.8 percent, to $2.9765 a pound at 9:41 a.m. on the Comex division of the New York Mercantile Exchange. The market was closed yesterday for a public holiday. The price gained 1.7 percent in the previous three sessions.
“All the metals are very much following the dollar as people are going for tangible assets,” said Gijsbert Groenewegen, a partner at Gold Arrow Capital Management in New York.
Copper also jumped on signs of improving global growth. Goldman Sachs Group Inc. boosted its price forecast.
German exports increased 2.3 percent in July, the third advance in a row, Germany’s Federal Statistics Office said today. The country is the world’s third-largest copper user after China and the U.S. China’s auto sales in August surged a record 90 percent from a year earlier, the China Association of Automobile Manufacturers said.
Exports ‘Encouraging’
“The export data is very encouraging,” said David Thurtell, an analyst at Citigroup Inc. in London. “We need to start buying goods from each other again. Car sales jumped in China. It is all good.”
On the London Metal Exchange, copper for delivery in three months gained $196, or 3.1 percent, to $6,520 a metric ton ($2.96 a pound).
Copper will reach $7,650 a ton at the end of 2010, Goldman Sachs said, almost a third higher than a previous estimate of $5,800.
“Increasing evidence of a stronger-than-anticipated recovery in global industrial activity” will lift prices, the bank said.
On the LME, lead rose $165, or 7 percent, to $2,515 a ton, the highest level since May 7, 2008.
Lead, used mainly in batteries, has more than doubled this year as smelters in China closed because of environmental regulations.
‘Short of Lead’
“There are thousands of small smelters in China that have probably never been tested for any environmental impact,” Citigroup’s Thurtell said. “If we lose even just a small percentage, the world is going to be short of lead.”
At least 500,000 tons of lead capacity is under investigation, according to Standard Chartered Plc. China produces 4 million tons a year, almost half of total global supplies, the bank says.
Aluminum, nickel, tin and zinc also gained in London.
To contact the reporters on this story: Millie Munshi in New York at mmunshi@bloomberg.net; Anna Stablum in London at astablum@bloomberg.net
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