Copper Rises for 3rd Straight Week on Comex Amid Supply Concern
July 22 (Bloomberg) -- Copper prices rose for the third week in a row in New York and climbed to a record in London amid expectations that mining companies won't be able to boost production enough to meet global demand.
Consumption will outpace supply from mines and recycled scrap by 100,000 tons this year, UBS AG, the world's biggest asset manager, said today in a report. Copper will average $1.55 a pound, 7.6 percent higher than previously forecast, UBS said. Stockpiles monitored by the London Metal Exchange are down 48 percent this year to a 31-year low.
``You have truly strong fundamentals in copper,'' said Don Oettinger, a metals trader at Dart Metals Trading Co. in Marlton, New Jersey. ``There's still demand, and as far as scrap is concerned, there's not a lot around.''
Copper futures for September rose 3.35 cents, or 2.1 percent, to $1.6035 a pound on the Comex division of the New York Mercantile Exchange. Prices climbed 2.7 percent this week after gaining 6 percent in the previous two weeks. A futures contract is an obligation to buy or sell a commodity at a set price by a specific date.
On the London Metal Exchange, copper for delivery in three months rose $51, or 1.5 percent, to $3,446 a metric ton ($1.5628 a pound) after reaching $3,453, the highest ever.
``I would not be shocked to see further gains,'' said William O'Neill, a partner at Logic Advisors LLC in Upper Saddle River, New Jersey.
China Revalues
New York futures fell 1.4 percent yesterday on speculation that China's pledge to revalue its currency won't be enough to reverse a decline in global metals demand. China said it was revaluing the yuan against a basket of currencies with the new yuan rate at 8.11 per U.S. dollar, compared with 8.3. Copper on the Shanghai Futures Exchange fell 0.2 percent today.
``The prevailing view became that this was still too little, too late,'' Edward Meir, an analyst in Darien, Connecticut, for London-based Man Financial Ltd., said in a daily report today.
The yuan revaluation may not help boost copper demand in China, said John Gross, director of metals management at Scott Brass Inc. in Cranston, Rhode Island. ``There have been too many events in the past where a change in the currency or change in commodity trading that was supposed to have a particular outcome didn't,'' he said.
Warehouses tracked by the Shanghai Futures Exchange held 36,925 tons this week, down 7.1 percent from a week earlier and the first decline this month.
Inventories in warehouses approved by the Comex are down to 12,912 short tons, with 1,932 tons due to come out of the Tucson, Arizona, warehouse. About 1,500 Asarco LLC workers are on strike covering the Mission, Silver Bell and Ray mines and Hayden smelter in Arizona and rod mill in Amarillo, Texas.
`Expect Higher Prices'
``The strike at Asarco has removed a fair amount of supply from the market at a time when inventories are dangerously low,'' Gross said. ``Unless or until something occurs, it seems we can expect still higher prices.''
Copper rose as much as 4.15 cents, or 2.6 percent, to $1.6115 a pound in New York today, approaching the intraday record of $1.6199 on Jan. 4, 1989.
``It doesn't take much to move this market 2 or 3 cents either way,'' Oettinger said. ``From what I'm used to, over the past 10 years, even $1.50 is an amazing price.''
Copper in 2001 touched a 14-year low of 60.35 cents a pound.
To contact the reporter on this story:
Claudia Carpenter in New York at ccarpenter2@bloomberg.net |
