Copper Rises on Concern for Rising Demand in China and India
2005-08-22 10:00 (New York)
By Pham-Duy Nguyen
Aug. 22 (Bloomberg) -- Copper prices in New York rose the
most in a week amid mounting concern that global supply isn't
keeping pace with demand, as China and India use more of the
metal in buildings, appliances and vehicles.
Copper demand in China, the world's biggest user, rose 8.8
percent from January to May, the International Copper Study Group
said Aug. 19. Demand rose 12 percent in India and 17 percent in
Russia. Mine output fell short of demand by 165,000 metric tons,
forcing suppliers to dig deeper into inventories.
``Demand is still there,'' said Steven Savitsky, a trader at
Hanemann Trading Co. in New York.
Copper futures for December delivery rose 1.7 cents, or 1
percent, to $1.629 a pound at 9:59 a.m. on the Comex. A close at
that price would be the biggest gain since Aug. 15. Prices
reached a record $1.738 a pound on Aug. 16 and have doubled in
the past two years.
The production deficit in the first five months of the year
was almost three times the amount currently held in warehouses
monitored by the London Metal Exchange.
Inventories fell to a 31-year low of 25,525 metric tons on
July 22, and currently are at 61,300 tons, the exchange said
today.
Prices have gained 11 percent since the beginning of July,
when about 1,500 workers at Asarco LLC, a U.S. copper producer
responsible for 1 percent of world supply, went on strike.
The strike ``is one of the things that's holding up the
market,'' said Savitsky. ``No one is expecting a settlement this
wee so if there is one, it would hurt the price.''
`Surreal' Prices
Prices continue to be ``surreal'' for physical buyers, said,
Steve Solomon, president of Solomon Metals Corp., a Lynn,
Massachusetts-based supplier of recycled copper to buyers in the
U.S. and China.
``Physical buyers are hesitant about making large
investments at these prices,'' Solomon said. ``They're only
buying as the material is needed. Chinese buyers are being quite
a bit more cautious.''
The main drivers for copper prices have been commodity
investment funds and speculators, Solomon said. ``The only people
who seem to think copper is going to go higher are people who are
in the investment industry,'' he said.
Hedge-fund managers and other large speculators decreased
their net-long position in New York copper futures in the week
ended Aug. 16, according to U.S. Commodity Futures Trading
Commission data. A futures contract is an obligation to buy or
sell a commodity at a set price by a specific date.
Speculative long positions, or bets prices will rise,
outnumbered short positions by 14,763 contracts on the Comex
division of the New York Mercantile Exchange, the Washington-
based commission said in its Commitments of Traders report. Net-
long positions fell by 1,601 contracts, or 10 percent, from a
week earlier.
On the LME, copper for delivery in three months rose $46, or
1.3 percent, to $3,609 a metric ton ($1.6367 a pound). Prices on
the Shanghai Futures Exchange rose 0.5 percent today.
--Editor: Stroth. |
