Copper Climbs to 7-Week High Amid Decline in Global Inventories
June 2 (Bloomberg) -- Copper prices in New York rose to a seven-week high, extending the longest rally since December, as inventories dropped to a 27-year low, renewing concern that demand from manufacturers will exceed global supply.
Stockpiles in warehouses monitored by the London Metal Exchange fell 67 percent in the past year to 43,225 metric tons, the lowest since May 1988. Copper prices are up 21 percent from a year ago.
``Declining inventory should still provide a floor for prices,'' said Edward Meir, an analyst at Man Financial in Darien, Connecticut. ``Demand is still pretty strong.''
Copper futures for July delivery rose 2.65 cents, or 1.8 percent, to $1.512 a pound at 12:07 p.m. on the Comex division of the New York Mercantile Exchange, after earlier reaching $1.522, the highest for a most-active contract since April 12.
Prices have climbed for nine straight sessions, matching the longest rally since a series of gains ended Dec. 21.
``People are getting ready to take more copper out of the LME,'' said Tom Boustead, an analyst at Refco LLC in New York. ``There's some good fund interest.''
London Metal Exchange stocks registered as ``off warrant,'' or about to be delivered out of warehouses, have more than doubled to 12,125 tons, or 28 percent of the total, since May 19. Stocks listed as off warrant aren't available to consumers.
Dollar Falls
Copper prices also rose as the dollar fell the most in three months against the euro. Copper is sold in dollars, making the metal cheaper for holders of foreign currencies when the dollar weakens.
``The dollar is off a little bit, and that's good for copper,'' Boustead said.
Shares of Phelps Dodge Corp., the world's second-biggest copper producer, rose 80 cents, or 0.9 percent, to $89.62 in New York Stock Exchange composite trading. The stock of the Phoenix- based company has climbed 34 percent in the past year, touching a record $109.12 on March 4 as copper prices climbed. Chile's state- owned Codelco is the largest copper producer by 2004 output.
Copper prices will extend their rally this year, Hugh Cameron, global head of mining for PricewaterhouseCoopers LLP, said in a report released today in Johannesburg. China, the world's biggest copper consumer, will need to rely more on imports to meet its needs as its economy grows, Cameron said.
China's economy, the fastest growing of the world's major economies, expanded 9.5 percent last year. Surging demand from China, the U.S. and Japan helped drive copper prices up 39 percent in 2004.
On the LME today, copper for delivery in three months rose $62 or 2 percent, to $3,174 a ton ($1.4397 a pound). Copper for delivery in July on China's Shanghai Futures Exchange rose 690 yuan to 30,400 yuan ($3,673) a ton.
A futures contract is an obligation to buy or sell a commodity at a set price by a specific date.
To contact the reporter on this story:
Claudia Carpenter in New York at ccarpenter2@bloomberg.net;
Jennifer Itzenson in New York at jitzenson@bloomberg.net.
Last Updated: June 2, 2005 12:20 EDT |
