Copper, Zinc Rise to Records After U.S. Construction Expands
2006-02-02 08:15 (New York)
By Chanyaporn Chanjaroen
Feb. 2 (Bloomberg) -- Copper and zinc advanced to records
in London after a report showed U.S. construction spending
increased in December, indicating expanding demand for metals
used in wires, pipes and fixtures.
Spending on construction in December rose 1 percent, the
most in three months, the Commerce Department said yesterday.
Construction is the biggest driver of copper demand, with an
average U.S. home containing 400 pounds of the metal, according
to the New York-based Copper Development Association.
The construction gain is one of the ``bits and pieces of
fundamental, economic news which are fairly bullish for the
metals market,'' Dominic Mound, director of base metals in the
Asia-Pacific region at ABN Amro Holding NV, said by telephone
from Sydney today.
Copper for delivery in three months on the London Metal
Exchange rose as much as $62.30, or 1.3 percent, to a record
$4,929 a metric ton, beating a record set yesterday by $31. The
contract traded at $4,919 as of 12:21 p.m. local time.
Investors have shifted more money into metals and other
commodities after they outpaced gains in equities and bonds last
year. The money invested in funds that track indexes such as the
Goldman Sachs Commodity Index rose to $80 billion in 2005,
Barclays Capital said. The total will double this year, analysts
at UBS AG said in a Jan. 30 report.
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. U.S. Treasury notes
and bonds returned 2.8 percent, according to Merrill Lynch & Co.
Rio Tinto
Rio Tinto Group, the world's third-largest miner, said
today annual net income rose 58 percent to a record $5.2
billion, bolstered by increased prices for copper, iron ore and
aluminum. Copper was the largest contributor to Rio Tinto's
profit last year.
Copper posted a small supply shortfall last year as demand
has been ``very slow,'' Vivek Tulpule, Rio's chief economist,
said today. ``High prices have encouraged consumers to run down
stocks, to use scrap instead of cathode and to use other
materials if possible,'' he said. Production disruptions partly
offset slower demand growth, he said.
Looking ahead this year, Tulpule said prices of metals
including aluminum will rise ``well above their historical
trend'' as global economic growth drives demand higher.
Aluminum has extended gains as investors buy the metal on
expectations of a supply shortfall, Tulpule said. High alumina
prices, smelter shutdowns in Europe and North America, and a
slowdown in Chinese exports all played a role in the increase,
he said. Aluminum for delivery in three months rose $53, or 2
percent, to a 17-year high of $2,630 a ton today on the LME.
Zinc Record
Zinc for delivery in three months rose $32, or 1.4 percent,
to $2,385 a ton, bringing gains in the past 12 months to 85
percent. Zinc posted the largest increase on the LME last year
on speculation that supply in 2006 won't meet demand for a third
consecutive year.
Zinc stockpiles monitored by the LME fell 2,300 tons, or
0.6 percent, to 368,500 tons, the exchange said today.
Stockpiles have dropped 40 percent in the past year, and are now
at less than 13 days of global consumption.
South Africa's Standard Bank Group estimates supply will
lag behind demand by 494,000 tons this year, after a global
shortfall of 342,000 tons last year, and 288,000 tons in 2004.
The LME ended a lending limit of $3.50 a ton a day on zinc,
introduced in September after Hurricane Katrina stranded
inventory of the metal in New Orleans in August.
Lead for delivery in three months rose 2.9 percent, the
biggest gains on the exchange today, to a record $1,430 a ton.
Among other metals for delivery in three months on the LME,
tin climbed $125, or 1.6 percent, to $8,000, the highest since
May 31. Nickel, the only loser, fell $35, or 0.2 percent, to
$15,240 a ton.
--With reporting by Chia-Peck Wong in Singapore. Editor: Risser
(slw, jwc). |
