Copper Prices Gain Most in Two Months on Declining Inventories
Oct. 29 (Bloomberg) -- Copper prices in New York rose the most in two months as falling inventories in Asia and the U.S. renewed concern that growing demand in China, the world's biggest buyer of the metal, will limit available supplies.
Global inventories monitored by the London Metal Exchange fell to a 14-year low, including declines at warehouses in Singapore and New Orleans. Phelps Dodge Corp., the largest U.S. producer, said China's copper use probably will increase 12 percent to 15 percent this year. Prices fell 2.7 percent yesterday after China raised interest rates to slow inflation.
``A more than short-term view supports that China's demand for resources will stay strong,'' said Hans Kunnen, who helps manage the equivalent of $14.4 billion at Colonial First State Investments in Sydney.
Copper futures for December delivery rose 4.85 cents, or 3.9 percent, to $1.302 a pound at 11:06 a.m. on the Comex division of the New York Mercantile Exchange, the biggest rise since Aug. 13. Prices, which have surged 42 percent in the past year, were down 0.3 percent for the week.
Shares of Phoenix-based Phelps Dodge, the world's second- biggest copper producer, rose $2.35, or 2.8 percent, to $87.04 in New York Stock Exchange composite trading, after dropping 3.9 percent yesterday.
Chile's state-owned Codelco, the world's largest copper producer, has increased its 2005 annual premium on copper to East Asian countries by as much as 85 percent because of limited supply and rising freight rates.
Chile Price Premiums
Premiums for the company's copper cathode to Japan and Taiwan are set at $125 a metric ton, up nearly 79 percent from this year's $70, said Tadashi Shichiri, general manager of Shimex, Codelco's Tokyo agent. Premiums to South Korea rose nearly 85 percent to $120 from $65, he said.
Copper is traded on the physical market in premiums to the cash price on the London Metal Exchange, the world's largest metal futures market. A futures contract is an agreement to buy or sell a commodity at a specific price and date.
``Given the growth rates we're seeing in China, the rate increase is not that big a deal,'' said Daniel Vaught, an analyst at A.G. Edwards & Sons Inc. in St. Louis. ``People are doing bargain-hunting.''
China yesterday raised its benchmark lending rate for the first time in nine years, trying to curb investment that's stoking inflation. China has been the fastest-growing market for companies such as Melbourne-based BHP Billiton, the world's biggest mining company.
Raising borrowing costs is the Chinese government's latest measure aimed at restraining inflation now running in excess of 5 percent after the world's largest developing economy grew 9.1 percent in 2003, the most in seven years. China's economy accounts for about 12 percent of world output, double its input of a decade ago.
The International Monetary Fund last month projected growth of 9 percent this year and 7.5 percent in 2005.
To contact the reporter on this story:
Claudia Carpenter in New York at ccarpenter2@bloomberg.net.
To contact the editor responsible for this story:
Steve Stroth at sstroth@bloomberg.net.
Last Updated: October 29, 2004 11:09 EDT |
