Copper Reaches Record $1.75 a Pound on Signals Demand May Rise
2005-09-28 14:00 (New York)
By Jennifer Itzenson
Sept. 28 (Bloomberg) -- Copper prices rose to a record $1.75
a pound in New York, extending a four-month rally, on speculation
demand may rise for the metal used in manufacturing, wiring and
construction.
U.S. orders for durable goods gained 3.3 percent in August,
the fourth increase in five months, the Commerce Department said
today in Washington. Damage caused by hurricanes Katrina and Rita
may spur further demand for the metal in the coming months, some
traders said. Since May 16, copper has gained 30 percent from
$1.33 a pound, near the year's low.
``The numbers that came out were a little bit bullish,'' said
Scott Meyers, an analyst at Pioneer Futures Inc. in New York.
``The usage is going to go up. There's going to be a lot of
building.''
Copper futures for December delivery rose 2 cents, or 1.2
percent, to $1.748 a pound on the Comex division of the New York
Mercantile Exchange after reaching the highest ever. Prices have
more than doubled in the past two years as demand outpaced
supplies.
A futures contract is an obligation to buy or sell a
commodity at a set price by a specific date.
Orders for expensive items made to last at least several
years rose to $210.9 billion in August, rebounding from the
biggest drop in 18 months in July. Economists expected durable
goods orders to rise 0.7 percent to $218.2 billion, based on the
median of 64 forecasts in a Bloomberg News survey, after a 4.9
percent drop in July.
The durable goods report ``broke the string of relatively
poor economic data that have been coming out over the past few
weeks,'' said Edward Meir, a commodity analyst with Man Financial
Ltd. in Darien, Connecticut. ``It blew all the estimates out of
the water.''
Demand Signals
Economic data next week will give better signals on the
hurricanes' impact on copper demand, Meir said. Reports on
construction spending, manufacturing and consumer confidence are
slated for next week. Construction is the biggest use for copper.
Global demand for copper may exceed production by 85,000 tons
this year, Morgan Stanley said in a report last month. Last year,
supplies fell short of demand by 760,000 tons, according to the
Lisbon-based International Copper Study Group.
The Reuters/Jefferies CRB Index of 19 commodities rose for a
third straight session, climbing 7.49, or 2.3 percent, to 334.52.
It has climbed 19 percent this year, boosted by gains in energy,
metals, sugar and cotton.
``Many funds in the market are expecting very strong inflow
of quarter-end buying in the commodity markets,'' said Michael
Guido, director of hedge-fund marketing and commodity strategy in
New York for Paris-based Societe Generale SA. ``Investor money is
still looking to buy commodities.''
Shares of Phelps Dodge Corp., the world's biggest publicly
traded copper producer by 2004 output, climbed $5.04, or 4
percent, to $130.19 at 1:54 p.m. in New York Exchange composite
trading after reaching a record $131.40. Before today, the shares
had gained 40 percent in the past year.
Chile's state-owned Codelco is the largest copper producer.
--Editors: McKiernan, Enoch |
