Copper Gleams as China Buys
Import Data Give
Speculative Boost
To 2-Month Rally
By ALLEN SYKORA
April 12, 2007; Page C10
Copper prices hit their highs for the year yesterday on speculative buying after data the previous day showed strong first-quarter demand from China, analysts said.
Nearby April copper rose 5.85 cents to $3.5755 a pound on the Comex division of the New York Mercantile Exchange. Most-active May copper rose 5.65 cents to $3.5825.
A two-month rally was further bolstered when China reported Tuesday that it imported 307,740 metric tons, or 338,514 tons, of copper and products last month, up from 239,772 metric tons in February.
For the entire first quarter, its imports jumped 58% from a year earlier to 776,576 tons.
"The demand is still there," said Michael Gross, futures analyst with Liberty Trading. "There are some worries supplies aren't going to be there, and prices are adjusting to that outlook."
This has prompted short-covering, or buying to offset positions in which traders had previously sold, on both Comex and the London Metal Exchange, said Patricia Mohr, vice president with Scotiabank.
Also, some investment funds have become outright buyers.
"I think you have a lot of speculative buying coming into copper," said Mr. Gross.
When copper hit records last spring -- $4.16 a pound on Comex -- many Chinese fabricators stopped buying on the open market, said Ms. Mohr. Instead, they used up inventories, plus China's State Reserve Bureau was thought to be selling inventories in an attempt to cool the market.
"But this year, they really worked down the inventories," said Ms. Mohr. Meanwhile, industrial production in China has been strong, she added.
Also, orders for copper from U.S. fabricators may stabilize or pick up after a slow fourth quarter, when they were hurt by the housing and auto sectors.
May copper peaked yesterday at $3.6235, which was a gain of $1.2255, or 51%, from the contract's Feb. 8 low of $2.3980.
Analysts offered a mixed outlook, however.
Mr. Gross said a correction lower could occur after all of the recent speculative buying.
Ms. Mohr said further gains are possible since the market is in a seasonally strong period. But later in the year, she said, copper could retreat due to increased supplies as miners seek to take advantage of "extremely lucrative" prices.
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