Aluminum, copper gain in London

Aluminum and copper rose in London as a weakening dollar bolstered the appeal of industrial metals as a hedge against a further drop in the US currency.

"Commodities are benefiting from liquidity inflows, as investors are looking for a hedge against inflation and the weak dollar," Credit Suisse analysts, including Tobias Merath in Zurich, said in a report.

"Investment flows are mainly responsible for the price increases." Aluminum for delivery in three months added $64, or 2.1 per cent, to $3,124 a tonne on the London Metal Exchange. Aluminum has gained 30 per cent this year, the biggest gainer of the based metals traded on the exchange.

The LME index tracking all six industrial metals has risen 25 per cent this year, partly buoyed by demand from funds tracking commodity indices and other investors. Gold, oil and platinum also rose to records this year.

Three-month aluminum will trade at $3,300 to $3,500 at the end of the second quarter, Merath said. That may surpass a record $3,310 traded in May 2006. Copper will end the period in a range of $8,500 and $9,000, according to Credit Suisse.

The contract climbed to all-time high of $8,820 on March 6. Inventories of aluminum tracked by LME expanded by 12,324 tonnes, or 1.3 per cent, to 963,550 tonnes.

All of increases in LME-tracked aluminum stockpiles were in the US, the world's second-largest user of the metal. Aluminum at US warehouses registered with the LME stands at 417,425 tonnes, a record.

Aluminum Production
US aluminum output rose 18 per cent to 219,268 tonnes in February, from a year earlier, the Arlington, Virginia-based Aluminum Association said yesterday.

Copper stockpiles declined 1,275 tonnes, or 1 per cent, to 128,975 tonnes, the lowest since August 24, LME said. Copper for delivery in three months added $125, or 1.5 per cent, to $8,400 a tonne.

Dwindling LME inventories increased the cost of borrowing the metal. Buyers of copper for next-day delivery paid $5 a tonne a day for the metal, the highest since February 14.

Nickel rose $325 to $31,875 a tonne, and lead added $80 to $3,115 a tonne. Tin increased $125 to $19,400 a tonne, and zinc added $80 to $2,630 a tonne.