Copper Prices Climb to 6th Straight Record on Supply Concerns
2005-11-17 14:44 (New York)
By Claudia Carpenter
Nov. 17 (Bloomberg) -- Copper prices rose to a record in
New York for the sixth straight session on expectations
supplies will remain limited for the rest of the year.
The global supply deficit this year will be 122,000
metric tons, even as demand falls 1.4 percent, the
International Copper Study Group said yesterday. U.S.
manufacturers such as OmniSource Inc. are paying more for
copper amid speculation China won't be able to get enough
metal to deliver against expiring futures contracts next
month. Copper has gained 6.3 percent since Nov. 9.
``We continue to be in the market to reduce our exposure
to the volatile metal prices,'' said Darren Stoody, futures
trading manager at OmniSource in Fort Wayne, Indiana.
Manufacturers sometimes buy the metal and sell futures to
hedge against price declines. ``You don't want to own metal at
this price and have it go 10 or 20 percent against you.''
Copper futures for December delivery rose 1.1 cents, or
0.6 percent, to $1.946 a pound. Prices are up 34 percent this
year. A futures contract is an obligation to buy or sell a
commodity at a set price for delivery by a specific date.
China has to find up to 200,000 metric tons of copper for
deliveries due Dec. 21, the Wall Street Journal said Nov. 14.
The State Reserve Bureau, which stockpiles metal for the
government, has requested permission to export 200,000 tons,
Reuters said yesterday. Chinese officials have declined to
comment.
China `Stonewalling'
``My guess is this is going to take months to work itself
out,'' said Joseph Mayer, president of the Copper & Brass
Fabricators Council Inc. in Washington. ``The Chinese
government is stonewalling.''
China imported 1.1 million tons in the first nine months
this year and exported 68,717 tons in the same period,
according to China's customs data.
China ``is physically short of copper, and a large net
importer of the metal due to its vast infrastructure
spending,'' Barclays Capital said in a report today. The
government's request to export metal may be ``some sort of
confirmation that there is indeed a large outstanding short
position that needs to be covered,'' Barclay's said.
U.S. industrial production rose 0.9 percent in October,
the most since May 2004, the Federal Reserve said today in
Washington. The U.S. is the second-biggest user of copper
after China.
Business for copper distributors in October was ``better
than the companion month of last year for the first time all
year,'' said Frank Brown, executive vice president of the
Copper & Brass Servicenter Association in Wayne, Pennsylvania.
On the London Metal Exchange, copper for delivery in
three months rose $5 to $4,145 a metric ton ($1.88 a pound).
Prices on the Shanghai Futures Exchange fell 0.6 percent.
--Editor: McKiernan (dje) |
