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Reuters commentary (September 2)
LME - Supply tight and weaker US dollar Copper hit a record high of $3,725 Friday LME copper jumped nearly $100, or 2.6%, hitting a record high of $3,725 a tonne, traders said the dollar Hurricane Katrina had a softening effect and nervous supplies. The dollar fell to a three-month low of 1.2589 against the euro, making copper denominated in dollars seem to be cheaper for buyers holding other currencies, and other metals also rose. Traders said that investment fund buying and short covering helped easily push copper prices higher than their previous high of 3,670 and made the 3,700 level the next upside target. A senior metal trader said that everyone wants a share, they buy in big money, the current market is driven by speculative funds. Three-month copper fell back to 3,688 U.S. dollars, but still rose by 60 U.S. dollars from Thursday's close of 3,628. Kemp, an analyst at Sempra Metals, said that after the hurricane, the U.S. economy remained uncertain, and the hurricane swept through the Gulf Coast on Monday. The hurricane will have an impact on inflation because the price of gasoline, oil, etc. will rise. However, whether this will affect the core inflation rate remains controversial. Tight supply tensions also affected the market, with LME copper stocks currently at 65,525 tons, far higher than the 31-year low of 25,525 tons hit in July. However, the same period last year, copper stocks reached more than 100,000 tons, and the reverse price difference is very strong. The reverse spread is currently 246/254 US dollars per ton, but once reached 280/290 in July, the highest since December 1995. The aforementioned senior metal dealer stated that this is unusual and unbelievable, but the bulls are still holding positions. Spot copper rose to a record high of US$3,955 per tonne. High oil prices may hurt demand Bartlett Capital analyst Stubby said that if oil prices continue to be high at US$70 per barrel, it will not be good for global economic growth and metal demand. news. She added that given the support of fundamental factors such as low inventory and disappointing production growth, we expect that only a serious slowdown in economic growth will have a negative impact on copper prices. Richardson of Deutsche Bank stated that the overall outlook for commodities is positive and that the continuous development of global industrial production has kept copper prices high for a long time. Supply chain pricing pressures, increased budgets for capital expenditures, and prolonged regulatory approval processes are all factors that bind suppliers, and they also contribute to price volatility.