Comex Copper leaps over $4 on China car sales

Comex copper surged over the $4 mark Tuesday morning as strong Chinese car-sales data and a weaker dollar lifted prices.

The most actively traded contract, for December delivery, was recently up 2%, or 7.7 cents, at $4.0335 per pound on the Comex division of the New York Mercantile Exchange. The contract is trading at the highest level since July 2, 2008.

Copper prices rallied after a report showed China's passenger-vehicle sales rose 27% in October from a year earlier to 1.2 million units. The red metal is used in automotive manufacturing.

"China had a big number in terms of car sales, which is giving copper a boost," said Matt Zeman, head of trading at LaSalle Futures in Chicago. "China is a huge consumer of copper, and one of the global economic leaders, so any signs of strong demand in any type of manufacturing is going to have a positive effect on the markets."

The red metal also drew support from a weaker dollar Tuesday, which eased against a number of currencies. When the dollar weakens, dollar-denominated assets such as copper futures attract buyers using foreign currencies as they appear cheaper. The ICE Dollar Index, which tracks the greenback against a basket of currencies, was recently at 76.908, down from 77.377 earlier.

Some investors are also purchasing hard assets like copper to hedge against escalating inflation and eroding currency value.

A unionized-worker strike at one of Chile's largest copper mines is also lending copper prices some support. The 1,551 mine workers at Do?a Inéz de Collahuasi began their strike Friday after government-mediated talks ended without any contract agreement.

"It's probably keeping a floor under copper prices," Mr. Zeman said.

The mine produces about 500,000 metric tons (551.2 short tons) of copper per year or 10% of Chile's annual output. Chile is the world's leading copper producer, accounting for about 35% of global output.

Marcelo Awad, chief executive of London-listed Chilean miner Antofagasta PLC, said Tuesday that copper prices will likely hold above $3 a pound through 2012.