Copper Rises in London on Concern Stockpiles Won't Meet Demand
2005-04-19 06:59 (New York)
By Chanyaporn Chanjaroen
April 19 (Bloomberg) -- Copper futures rose for a second day
in three in London on concern an increase in stockpiles of the
metal won't be enough to meet rising demand from producers of
electrical wires and pipes.
Copper for immediate delivery on the London Metal Exchange
earlier today traded at $170 a metric ton more than metal for
delivery in three months. The gap between the contracts was about
$160 last week. In a market with adequate supply, forward
contracts are more expensive than nearby ones to reflect
warehousing and interest costs.
``We expect strong seasonal demand in the second quarter to
help push base metals prices higher again,'' Ingrid Sternby, an
analyst at Barclays Capital in London, said in an e-mailed report
yesterday. ``Output growth is failing to keep up with the
demand.''
Copper for delivery in three months rose $18, or 0.6
percent, to $3,200 a ton. The contract fell 3.2 percent last week
on speculation production from mines and smelters will catch up
with demand in China, the world's largest consumer of the metal.
Copper stockpiles monitored by the LME rose 14 percent this
month to 51,825 tons. Miners and smelters have increased
production to take advantage of prices that surged 37 percent
last year. Stockpiles are still 67 percent lower than a year ago.
Global copper demand will rise 3.2 percent this year to 17
million tons, exceeding production by 275,000 tons, Robin Bhar, a
Standard Bank analyst, forecast in a February report.
Aluminum stockpiles monitored by the LME rose for a second
day, to 550,600 tons, bringing total gains to 2.8 percent.
Aluminum for immediate delivery costs $14 a ton more than the
contract for delivery in three months, a situation known as
backwardation.
Stock Rise
That may be attracting aluminum into warehouses, Jim Lennon,
an analyst at Macquarie Bank Ltd. in London, said today by
telephone.
``I wouldn't be concerned about the stock rise,'' Lennon
said. ``It's very small in a context of a 31 million-ton-per-year
aluminum market.''
Aluminum demand will outpace supply by about 600,000 tons
this year, unchanged from last year, Lennon said. Demand from
China, the world's second-biggest consumer of aluminum, will
continue to boost prices, he said.
China may become a net importer of the metal this year
because of increasing domestic demand and its limited ability to
produce more, Alcan Inc. Chief Executive Travis Engen said on
April 13. Montreal-based Alcan is the world's second-largest
aluminum maker.
Chinese demand has grown on average 15 percent a year since
1999, to 5.97 million metric tons last year, according to
estimates from BB&T Capital Markets analyst Lloyd O'Carroll.
Aluminum for delivery in three months rose for a third day,
climbing $8, or 0.4 percent, to $1,872. The contract reached a 10-
year high of $2,016 on March 11.
Among other LME-traded metals for delivery in three months,
nickel rose $175, or 1.1 percent, at $15,525 a ton and zinc
gained $11.50, or 0.9 percent, at $1,282 a ton. Lead was up
$1.50, or 0.2 percent, at $922 a ton. Tin was unchanged at $8,075
a ton.
--Editor: Wallace, A. Brown |
