Copper Climbs in N.Y. as Metal Inventories Tumble in China
2008-06-13 12:34 (New York)
By Millie Munshi
June 13 (Bloomberg) -- Copper rose as a drop in inventories in China, the world's biggest user of the metal, renewed supply concerns.
Stockpiles monitored by the Shanghai Futures Exchange tumbled 4,837 metric tons, or 12 percent, to 33,992 tons this week. Copper has more than quadrupled in the past five years, as mining companies struggled to keep up with consumption, boosted by China's surging economy.
``Strong supply constraints'' and demand in China and other emerging markets will buoy copper and other metals, Tom Albanese, chief executive officer of Rio Tinto Group, the world's third-largest mining company, said in an interview on Bloomberg Television.
Copper futures for September delivery gained 5.6 cents, or
1.6 percent, to $3.5975 a pound at 12:33 p.m. on the Comex division of the New York Mercantile Exchange. Before today, the price gained 17 percent this year.
``The drawdown in Shanghai stocks will prove supportive for the market,'' said Eric Wittenauer, an analyst at Wachovia Securities in St. Louis. ``The demand there is still strong.''
Gains may be limited as a rally by the dollar and lower energy costs reduced the appeal of the metal as a hedge against inflation, said Michael Gross, a futures analyst at OptionSellers.com in Tampa, Florida.
The dollar headed for its biggest weekly gain versus the euro in three yeas as traders bet the Federal Reserve will increase borrowing costs this year. Crude oil dropped as much as
2.4 percent.
`Prices to Weaken'
``The prospect of a strengthening dollar is making copper less attractive as an investment, and we fully expect prices to weaken,'' Gary Mead and Matthew Turner, analysts at Fortis Group, said in a report.
The metal may drop to as low as $7,500 a metric ton ($3.40 a pound) in the next month, Fortis said.
Still, production constraints will continue to support prices in the long term, Peter Mallin-Jones, a London-based analyst at Goldman Sachs Group Inc., said in a report on June 11. Copper this year will average $8,211 a ton, Goldman forecasts.
``New projects continue to be constrained'' by increasing costs, hampering mining company efforts to increase output, Rio's Albanese said.
On the London Metal Exchange, copper for delivery in three months gained $120, or 1.5 percent, to $7,960 a ton. The price rose to a record $8,880 on April 17. |
