Copper Reaches 7-Month High in London as U.S. Recovery Expected
London, Feb. 1 (Bloomberg) -- Copper jumped for a second day
and to a seven-month high in London on traders' expectations that
a U.S. economic recovery will spur demand from users such as
builders and electronics makers.
Prices climbed at the end of a week when the U.S. said the
world's largest economy had unexpectedly grown last quarter and
the Federal Reserve said a recovery is starting. Still, there is
little evidence of growth in demand from end users, analysts said.
``This is a speculation-driven rally, while signs from actual
copper producers and consumers remain very weak,'' said Robin
Bhar, an analyst at Standard Bank in London.
Copper for delivery in three months climbed $29, or 1.8
percent, to $1,601 a metric ton on the London Metal Exchange, its
highest since June 19. Prices have jumped by a fifth from
November's 14-year low, gaining 3.2 percent this week alone.
Inventories of copper in London Metal Exchange-monitored
warehouses have climbed since March, a sign that supply is
outpacing demand. Inventories have more than doubled in the past
year to 855,275 metric tons, the highest in the 125-year history
of the exchange.
Leading Indicator
Mining company shares rose with copper prices. Rio Tinto Plc,
the third-biggest miner, reached its highest price since May,
gaining 24 pence, or 1.7 percent, to 1,414 pence in London. BHP
Billiton Group, the biggest mining company, gained 4 pence, or 1.1
percent, to 383.5p.
``Mining stocks usually lead a revival in demand by six to
nine months,'' said Martin Squires, an analyst at J.P. Morgan
Chase & Co. who said he expects the U.S. economy to resume growth
in the second quarter. BHP and Rio shares have both risen by more
than a third in the past four months.
In the U.S., speculators had entered twice as many contracts
to buy copper as to sell it as of Jan. 22, while commercial buyers
held so-called short positions by a margin of almost 4-to-3,
according to the U.S. Commodities Futures Trading Commission.
On Wednesday Phelps Doge Corp., the second-biggest copper
miner, declined to say when it would return to profitability after
four quarters of losses. While the Phoenix-based company lost
$78.3 million in the fourth quarter, its shares have jumped 28
percent since Oct. 1.
--Craig Mellow in the London newsroom (44-20 7673-2757), or
cmellow1@bloomberg.net. Editor: Foroohar, Coulter |
