Copper Rises to Record in London on Fund Buying; Aluminum Gains
2006-02-01 09:52 (New York)
By Chanyaporn Chanjaroen
Feb. 1 (Bloomberg) -- Copper rose to a record in London as
investment funds bought metals to diversify their portfolios.
Aluminum jumped to a 17-year high.
Funds have shifted more money into metals and other
commodities after they outpaced other classes of assets such as
equities last year. The money invested in funds which track
indexes such as the Goldman Sachs Commodity Index rose to $80
billion in 2005, according to Barclays Capital. The total will
double this year, analysts at UBS AG said in a Jan. 30 report.
``That, to a large extent, does explain the rise in prices
of copper,'' Maqsood Ahmed, an analyst at Calyon Global Trading,
one of the 11 companies trading on the floor of the London Metal
Exchange, said in a television interview today.
Copper for delivery in three months on the LME traded as
high as $4,876 a metric ton, beating the record set Jan. 27 by
$10.70. The metal, used to make wiring and plumbing, was $30, or
0.6 percent higher at $4,870 as of 2:21 p.m. London time.
Copper for March delivery on the Comex division of the New
York Mercantile Exchange rose 0.85 cents, or 0.4 percent, to
$2.237 a pound. It traded at a record $2.2395 on Jan. 30.
Investors are choosing commodities after prices soared in
2005. The Reuters Jefferies CRB Index, which tracks commodity
futures, gained 17 percent last year, compared with a 3 percent
increase in the Standard & Poor's 500 Index of U.S. companies.
Supply and demand hasn't changed sufficiently to cause the
price increases for copper and aluminum, Ahmed said. South
Africa's Standard Bank Group, which trades on the London Metal
Exchange, said in a report yesterday that global production will
rise 6.9 percent in 2006 to beat usage by 168,000 metric tons.
The bank estimated there was a 260,000-ton shortfall in 2005.
Stockpiles Rise
Stockpiles in warehouses monitored by the LME have more
than doubled in the past 12 months to 96,000 tons.
Copper for immediate delivery was $73 above the three-month
price today. The spread, or backwardation, between the two
prices plunged 61 percent since trading at a 10-year high of
$265 a ton in June.
This decline indicates copper consumers are finding it less
difficult to buy metal at short notice, analysts said.
``More metal will become available and the spreads are
reflecting this expectation,'' Edward Meir, an analyst at Man
Financial in Darien, Connecticut, said yesterday in a telephone
interview.
Other metals also gained on the LME. Aluminum increased
$59, or 2.3 percent, to $2,575 a ton. Earlier it traded at
$2,583, the highest since Sept. 2, 1988.
Lead rose $38, or 2.9 percent, to $1,360 a ton, tin gained
$26 to $7,975. Nickel climbed $175 to $15,400, and zinc was up
$27 to $2,333 a ton.
--Editor: Casey |
