I sense people are bored with metals, but they shouldn't be.
Copper Prices Rise as Global Demand Outpaces Miners' Production
2005-04-06 09:46 (New York)
By Claudia Carpenter
April 6 (Bloomberg) -- Copper prices in New York rose for the
second day this week amid expectations that mining companies will
be unable to boost production enough to meet rising global demand.
The gap between consumption and supply from mines and scrap
yards will be 181,000 metric tons this year, Morgan Stanley said
today in a report. The New York-based securities company boosted
its 2005 price forecast by 8 percent. Stockpiles monitored by the
London Metal Exchange are down 74 percent in the past year, even
after a rise of 1.4 percent today, exchange figures show.
``The market is still in deficit, and that's a fundamental
that's positive for higher prices,'' said John Gross, director of
metals management at Cranston, Rhode Island-based Scott Brass Inc.,
a maker of metal parts for automobiles, electronics, jewelry and
doorknobs. ``Technically, the market has been in a consolidation
phase for eight weeks.''
Copper futures for May delivery rose 0.45 cent, or 0.3
percent, to $1.489 a pound at 9:44 a.m. on the Comex division of
the New York Mercantile Exchange. Prices are up 13 percent in the
past year. A futures contract is an obligation to buy or sell a
commodity at a set price by a specific date.
The metal will average $1.40 a pound this year, Morgan Stanley
said in its report. As of yesterday, the Comex average was $1.4473.
Prices since March 1 have traded between a 16-year high of
$1.521 on March 8 and $1.442 on March 2. ``In the last couple days,
the market has tested the lower end of the range and then moved
higher,'' Gross said. ``The fundamentals would support a break to
the upside, and if that occurs, I would expect more speculative
buying as a follow-through.''
`Strong First Half'
Prices will average $1.30 to $1.35 a pound this year, Gross
said. ``The view had been and still remains we'll have a strong
first half and deficit in the market and gravitate to a balanced
position by year end,'' he said.
On the London Metal Exchange, copper for delivery in three
months rose $19 to $3,254 a metric ton ($1.476 a pound).
Copper for June delivery on China's Shanghai Futures Exchange
rose 0.8 percent to 31,940 yuan a ton ($1.75 a pound) after
reaching a record 32,120 yuan. China is the world's biggest buyer
of copper.
Golden Dragon Precise Copper Tube Inc., China's biggest tube
producer, is buying more metal to fill orders from makers of air
conditioners as summer in the Northern Hemisphere approaches.
``We have no choice but to buy copper even at these prices,''
said Huang Xiaotian, head of the copper department at Henan-based
Golden Dragon.
China's economy grew at the fastest pace in eight years, up
9.5 percent in 2004, spurring demand for raw materials such as
copper to construct buildings and produce more power lines, cars
and appliances.
``Investment in electricity generation and all the equipment
that goes with that continues and is expected to continue in fact
for at least through 2006,'' said Patricia Mohr, an economist at
Scotiabank Group in Toronto. ``That part of the demand balance for
copper isn't going to fade.''
--With reporting by Simon Casey in London and Chia-Peck Wong in
Singapore. Editor: Stroth, McKiernan |
