Copper Climbs for 2nd Day on Speculation Use Will Beat Output
May 23 (Bloomberg) -- Copper futures rose for a second day in London, erasing an earlier decline, on speculation that a price rally isn't yet over and that demand will exceed production.
Demand for the metal used to make power cables will grow this year in China and the U.S., the world's two largest consumers, some analysts have said. Last year prices gained 40 percent as a deficit led consumers to use stockpiled copper.
``The underlying fundamentals of supply and demand around the world remain the same,'' said Charles ``Chip'' Goodyear, Chief Executive Officer of BHP Billiton, the world's largest mining company said. ``We are seeing very good economic conditions around the world, the supply side is still struggling to keep up.''
Copper for delivery in three months on the London Metal Exchange rose $20, or 0.3 percent, to $7,600 a metric ton as of 9:42 a.m. local time. It has slumped 14 percent since trading at a record $8,800 on May 11.
The volatility of copper prices will continue because of buying and selling from speculative investors, said Peter Hollands, managing director of U.K. consulting company Bloomsbury Minerals Economics Ltd.
``Conditions like this will probably prevail for another year,'' Hollands said.
``You are going to get volatility when you have a huge amount of money trying to chase after what is, in world sense, a relatively limited market,'' Goodyear said.
In 2005 copper use beat output by 100,000 tons, analysts at UBS AG said in a report last month. This year there will be a shortfall of 200,000 tons, UBS said.
Aluminum prices rose $10, or 0.4 percent, to $2,770 a ton on the LME. Lead increased $20 to $1,155, zinc dropped $15 to $3,315, tin gained $100 to $8,200 and nickel was $251 lower at $20,649.
To contact the reporter on this story:
Katy Watson in London at kwatson@bloomberg.net
Last Updated: May 23, 2006 04:54 EDT |
