Copper Rises on Expectations That Recovery Will Boost Demand
New York, March 4 (Bloomberg) -- Copper rose to a two-week
high, gaining for the third time in four sessions, on signs the
U.S. is emerging from a recession that curbed industrial demand
for metals.
Reports showing the first growth in U.S. manufacturing in 19
months and increases in consumer spending, personal income and
construction point to an economic rebound. Copper prices have
risen 23 percent from a 14-year low in November on expectations
that the U.S. will help lead a global economic recovery.
``The general sentiment is that world economies have seen a
bottom, and that's going to mean more demand for copper,'' said
Tony Nappi, a copper trader at Triland USA Inc. in New York.
Copper for May delivery rose 0.9 cent, or 1.2 percent, to
74.15 cents a pound on the Comex division of the New York
Mercantile Exchange, the highest closing price for a most-active
contract since Feb. 14. Prices still were 10 percent lower than a
year earlier.
In London, copper for delivery in three months rose $17, or
1.1 percent, to $1,609 a metric ton (72.98 cents a pound) on the
London Metal Exchange.
U.S. factory orders probably rose 1.5 percent in January,
gaining for the third time in four months, according to a survey
of 45 economists by Bloomberg News. The Commerce Department is
scheduled to release its monthly report on factory orders on
Wednesday.
Copper Inventories
Increased industrial demand for copper wire and pipes is
needed to erode copper inventories monitored by the London
exchange, which have almost tripled in the past year.
``What we really need to see now is users restocking,'' Nappi
said. ``Right now, they're just buying as they need.''
Supplies of copper in exchange-monitored warehouses fell by
550 metric tons, or 0.1 percent, to 910,050 tons in today's
inventory report, declining from a record level on Friday.
Contributing to prospects for further manufacturing growth in
the U.S. was the erosion of factory product inventories during the
recession, economists said. Inventories fell 0.6 percent in
December, declining for an 11th month, according to Commerce
Department figures.
``What we have seen is the largest liquidation of inventories
in any recession'' since World War II, said Paul Kasriel, chief
economist at Northern Trust Securities in Chicago. ``There's not
much left on the shelves to fill orders with, so you're going to
have to see increases in production, and that's going to lead to
increased demand for copper.''
Copper prices were buoyed during the recession by strong
demand from builders, the largest users of the metal.
Construction starts on houses in the U.S. in January were
running at the highest level in almost two years, the Commerce
Department said in a Feb. 19 report. An average single-family home
contains about 400 pounds of copper, according to the Copper
Development Association, a New York-based industry group.
--Claudia Carpenter in the New York newsroom (212) 318-2346 or at
ccarpenter2@bloomberg.net with reporting by Siobhan Hughes and
Alex Tanzi in Washington. Editor: Bixby |
