Copper Rises to 4 1/2-Month High on Signs of Demand Resurgence
New York, Nov. 29 (Bloomberg) -- Copper rose to its highest
price in 4 1/2 months, as government reports signaled a recovery
in demand from U.S. manufacturers and builders.
Factory orders for durable goods including automobiles and
aircraft in October had their biggest gain in nine years, and new
home sales rebounded as buyers were attracted by low borrowing
costs, Commerce Department reports showed. Stronger demand is
needed to extend the 21 percent rise in copper prices from a 14-
year low early this month.
``We are off on the right foot now,'' said William O'Neill,
head of futures research at Merrill Lynch & Co. in New York. ``We
are being set up for an extended rally next year in base metals.''
Copper for December delivery rose as much as 1.25 cents, or
1.8 percent, to 72.75 cents a pound on the Comex division of the
New York Mercantile Exchange, the highest price for a most-active
contract since July 12.
In London, copper for delivery in three months rose as much
as $36, or 2.3 percent, to $1,575 a metric ton (71.44 cents a
pound) on the London Metal Exchange, the highest since July 18.
New home sales in the U.S. rose in October to the fastest
pace in four months, the Commerce Department said. The 0.2 percent
increase brought the annual sales rate to 880,000 homes. Sales
through October are on pace to finish the year at 912,000 homes,
which would exceed the previous record set in 1998.
The average 30-year mortgage rate dropped to 6.62 percent in
October from 6.82 percent a month earlier and 7.8 percent in
October 2000, according to statistics from Fannie Mae, the No. 2
buyer of U.S. mortgages.
Builders are the biggest users of copper. An average single-
family home contains about 400 pounds of the metal, according to
the New York-based Copper Development Association, an industry
group.
Durable Goods
U.S. orders for durable good rose a greater-than-expected
12.8 percent in October, rebounding from a revised 9.2 percent
drop in September, the department reported. It was the biggest
monthly gain in nine years.
The increase in orders for durable goods was led by increased
bookings for aircraft, automobiles and defense hardware, the
department said.
The resurgence in orders signals increased industrial demand
for copper. Weakening demand from automakers and other
manufacturers was the main cause of this year's 14 percent slide
in copper prices.
Automakers sold new vehicles at a record pace last month,
depleting inventories and signaling a resurgence in demand for
copper from that industry.
Ford, the second-largest U.S. automaker, said this week it
may have to build more North American cars and trucks in the first
quarter than previously expected because no-interest loans brought
its stockpiles to the lowest level since March 1992.
An average car contains about 50 pounds of copper, according
to the Copper Development Association.
--Mark Shenk in the New York newsroom (212) 893-4331, or at
mshenk1@bloomberg.net with reporting by Siobhan Hughes and Brendan
Murray in the Washington newsroom/jb |
