Copper Rises for Third Straight Session Amid Falling Stockpiles
2005-05-24 14:09 (New York)
By Choy Leng Yeong
May 24 (Bloomberg) -- Copper prices in New York rose for a
third straight session on signs supply is falling short of demand
for the metal used in homes, cars and other appliances.
Inventory in warehouses monitored by the Comex, the London
Metal Exchange and the Shanghai Futures Exchange, dropped 0.6
percent today to 104,512 metric tons, down 72 percent in the past
year. Copper sold in dollars also rose as the U.S. currency fell
from a seven-month high against the euro.
``Copper inventories are pretty low,'' said Charles Bradford,
a metals analyst at Soleil Securities Corp. in New York. With a
weaker dollar, ``copper becomes cheaper elsewhere in the world in
local currency terms and that increases demand.''
Copper futures for July delivery climbed 1.65 cents, or 1.2
percent, to $1.405 a pound on the Comex division of the New York
Mercantile Exchange, the highest closing price for a most-active
contract since May 11. Prices reached a 16-year high of $1.536 on
April 12. A futures contract is an obligation to buy or sell a
commodity at a set price by a specific date.
Canceled warrants, which indicate how much copper vendors
plan to move out of LME warehouses, jumped 73 percent to 10,025
tons in the past four sessions, representing a fifth of the
inventory remaining.
``Robust western world demand, large Chinese metal
requirements and low inventory levels are likely to drive prices
higher,'' Barclays Capital in London said in a report today.
U.S. Home Resales
Sales of previously owned homes in the U.S., the second-
largest copper consumer after China, rose 4.5 percent in April to
a record 7.18 million units at an annual rate, the National
Association of Realtors said today. The median forecast in a
Bloomberg News survey of 55 economists had resales increasing by
to 6.9 million.
Builders are the biggest user of copper, accounting for 40
percent of demand. An average single-family home contains about
400 pounds of the metal, according to the Copper Development
Association, a New York-based industry group.
In the week ended May 17, speculators reduced holdings in
copper futures to the lowest since June 22, data from the U.S.
Commodity Futures Trading Commission showed on May 20.
Speculative long positions, or bets prices will rise,
outnumbered short positions by 3,321 contracts on the Comex, the
Washington-based agency said in its Commitments of Traders report.
Net-long positions fell by 13,563 contracts, or 80 percent, from a
week earlier.
``A substantial reduction in fund length, coupled with low
inventories, suggests downside price risk is limited, even under a
scenario where the dollar continues to appreciate and economic
activity moderates,'' Barclays said.
On the London Metal Exchange, copper for delivery in three
months rose $15, or 0.5 percent, to $3,050 a metric ton ($1.3835 a
pound).
--Editors: McKiernan, Enoch |
