Copper Rises as an Interest-Rate Cut Would Help Boost Demand
New York, Nov. 4 (Bloomberg) -- Copper rose to a 3 1/2-month
high on speculation that the Federal Reserve will cut interest
rates this week, strengthening the U.S. economy and increasing
industrial demand for metals.
Twenty of 22 primary dealers, companies that trade directly
with the Fed, predicted a rate reduction when central-bank policy
makers meet two days from now. Prospects for an economic recovery
at a time when mining companies are cutting back contributed to a
9.8 percent rise in copper prices in the past four weeks.
An interest-rate cut ``should boost copper market values,''
said Michael Guido, head of the commodity hedge-fund sales desk at
Societe Generale SA in New York. ``It's all about perception that
demand is going to get better six months from now.''
Copper for December delivery was up 0.4 cent at 73 cents a
pound at 10:43 a.m. on the Comex division of the New York
Mercantile Exchange. The contract earlier in the session touched
73.3 cents, the highest price for a most-active contract since
July 18.
Prices were 19 percent higher than at this time last year,
when copper futures were plunging toward a 14-year low of 60.35
cents a pound on Nov. 8. Prices have been boosted partly by
announcements of production cutbacks.
Chile's Codelco, the world's largest copper producer, said in
August that its output fell 4.9 percent in the first half of the
year from the same period in 2001 as part of planned cutbacks
aimed at boosting prices.
Phoenix-based Phelps Dodge Corp., the second-largest
producer, said last week that its third-quarter output was down
7.1 percent from a year earlier.
In London, copper for delivery in three months was up $17, or
1.1 percent, at $1,600 a metric ton (72.57 cents a pound) on the
London Metal Exchange after touching a 3 1/2-month high of $1,602.
--Claudia Carpenter in the New York newsroom (212) 318-2346 or at
ccarpenter2@bloomberg.net, with reporting by Iain Rogers in London
Editors: Bixby, *Banker. |
