Copper May Rise for 2nd Week on Speculation Funds Still Buying
2006-01-29 19:19 (New York)
By Chanyaporn Chanjaroen
Jan. 30 (Bloomberg) -- Copper may rise for a second
consecutive week on speculation that funds are still increasing
their holdings of the metal on expectations supply will continue
to fall short of demand.
Eight out of 12 analysts, traders and investors surveyed by
Bloomberg News on Jan. 26 and 27 said the metal will gain. Two
expected a decline and two little change. Copper reached a record
last week, bringing gains in the past year to 57 percent. Global
demand has outpaced supply since 2002.
``The rally is not over yet,'' Francisco Blanch, a commodity
strategist of Merrill Lynch & Co. in London, wrote in a Jan. 27
report. Gains in prices will come from ``unforeseen supply
disruptions, ongoing bottlenecks at various smelters and
critically low inventory levels.''
Copper for delivery in three months on the London Metal
Exchange rose $303, or 6.7 percent, to $4,845 a metric ton last
week. The contract rose to a record $4,865.30 a ton Jan. 27 after
stockpiles monitored by the exchange fell to a three-week low.
On the Comex division of the New York Mercantile Exchange
last week, copper for March delivery closed 6.8 percent higher at
$2.233 a pound. On the Shanghai Futures Exchange, copper for
April delivery rose 1.2 percent to a record 45,770 yuan ($5,678).
Chinese prices include 17 percent tax and 2 percent duty.
Copper supply from mines and recycled scrap will lag demand
by 200,000 tons this year, according to an estimate from Credit
Suisse. Stockpiles monitored the three commodities exchanges in
London, New York and Shanghai declined last week to 161,755 tons,
the lowest since Jan. 3. The total is equal to less than four
days of global consumption.
Price Averages
Merrill Lynch was among banks increasing metal forecasts
last week. Copper will average $4,838 a ton this year, a 42
percent increase on the previous forecast, according to a Jan. 27
report. Citigroup increased its 2005 copper price estimate 13
percent to $1.30 a pound ($2,865 a ton).
``Since early 2004, when this investment cycle began, funds
invested have tripled,'' Citigroup said Jan. 25.
Commodity-linked index funds have beaten other types of
investments in the past year. The Goldman Sachs Commodity Index,
which tracks a basket of commodities including some base metals,
has risen 33 percent over the last 12 months, compared with a 9.3
percent increase in the Standard & Poor's 500 Index.
Rio Tinto Group, the world's third-biggest miner, last week
said it will focus on finding copper in a joint venture with OAO
GMK Norilsk Nickel, Russia's biggest mining company. The venture
will develop mineral resources in eastern Siberia and the Russian
Far East.
--With reporting by Samantha Shields in Moscow. Editor: Wallace |
