Copper Rises to 31-Month High in New York as China Refrains From Rate Gain
By Maria Kolesnikova and Glenys Sim - Dec 13, 2010 6:03 AM PT
bloomberg.com
Copper futures climbed to a 31-month high in New York and a record in London after China refrained from raising borrowing costs, while higher copper output and imports by the largest consumer boosted the demand outlook.
The People’s Bank of China, which on Dec. 10 raised reserve-requirement ratios for banks by half a percentage point, didn’t increase interest rates at the weekend even after consumer prices jumped 5.1 percent in November. Copper and lead output in China, the largest consumer of both metals, advanced to records in November as producers raised production following price gains. Aluminum output declined for a third month. China also said Dec. 10 imports of copper and copper products into the country gained for the first time in three months.
“Good economic data from China (despite CPI), very firm Asian equity markets, which is a sign of high risk appetite, no interest rate hike, monthly records of copper output in China in November” all helped copper break the previous record, said Daniel Briesemann, an analyst at Commerzbank AG in Frankfurt.
Copper for delivery in March rose as high as $4.2065 a pound and traded at $4.2035 a pound at 9 a.m. on the Comex in New York. Copper touched an intra-day record of $4.2605 on May 5, 2008. Copper for delivery in three months gained as much as 2.4 percent to $9,210 a metric ton, and traded last at $9,204 on the London Metal Exchange. The contract breached the previous high of $9,091 a ton, which was set on Dec. 9.
“I don’t think that the rally will stall,” Briesemann said. “It will rather continue during next year. $10,000 are definitely in sight.”
Exchange-Traded Products
Copper in London has surged 25 percent this year on expectations that supply won’t keep up with demand, depleting stockpiles, and as the introduction of exchange-traded products backed by the metal boosted usage. Copper has also gained as investors sought to hedge rising prices and weaker currencies.
Open interest in LME copper, or futures outstanding, rose to a record 321,478 contracts Dec. 10, according to data compiled by Bloomberg.
UBS AG was among firms predicting a rate increase in China at the weekend as the statistics bureau brought forward the release of the inflation data to Dec. 11, and after the Communist Party’s Politburo said the nation would shift to a tighter, “prudent” monetary policy next year.
Imports of copper and products by China rose 29 percent last month to 351,597 tons compared with October, the General Administration of Customs said on Dec. 10. Shipments were 21 percent higher than a year earlier, according to Bloomberg data. Imports in the first 11 months of this year gained 0.7 percent to 3.95 million tons.
‘Maintain Market Momentum’
The nation’s output of refined copper climbed to 443,000 tons last month, 4.5 percent higher than the month before, while production of refined lead gained 29.5 percent to 448,000 tons, the statistics bureau said today. Those are monthly records, according to traders and analysts.
ETFS Physical Copper, started by ETF Securities Ltd., began trade on the London Stock Exchange on Dec. 10.
“Chinese import data for November, falling LME inventories and the launch of the first ETC emphasized the strengthening demand outlook,” Morgan Stanley analyst Hussein Allidina said in a report today. “We expect the twin themes of improving physical demand and heightened investor interest will maintain market momentum going into 2011.”
LME inventories of copper have shrunk 30 percent this year, set for the first annual drop since 2004. They rose for a first day in six today to 350,450 tons, daily exchange figures showed.
Premium Advances
Hedge-fund managers and other large speculators increased their net-long position in New York copper futures in the week ended Dec. 7, the U.S. Commodity Futures Trading Commission said Dec. 10. Speculative long positions, or bets prices will rise, outnumbered short positions by 26,432 contracts on the Comex. Net-long positions rose by 5,325 contracts, or 25 percent, from a week earlier.
Immediate-delivery LME copper’s premium to three-month metal rose for a fourth day, gaining 44 percent to $62 a ton. Prices moved on Nov. 8 to a so-called backwardation, when nearby metal trades above longer-term contracts, potentially signaling supply concern.
The fee to borrow aluminum for next-day delivery, the so- called tom-next spread, jumped to a premium of as much as $20, the highest since November 2006, and was last at $10, compared with a $1.25 premium Dec. 9. An increase in the fee would indicate tightening supply.
Tin for three-month delivery on the LME rose 0.2 percent to $25,850 a ton. Prices reached a record $27,500 on Nov. 9. The metal has jumped 53 percent this year, leading advances on the exchange, after production was disrupted in Indonesia and the Democratic Republic of the Congo.
Aluminum rose 0.7 percent to $2,325 a ton and nickel climbed 0.9 percent to $24,201 a ton. Lead gained 1.9 percent to $2,435 a ton and zinc added 2.1 percent to $2,332.75 a ton.
To contact the reporters on this story: Maria Kolesnikova in Moscow at mkolesnikova@bloomberg.net; Glenys Sim in Singapore at Gsim4@bloomberg.net.
To contact the editor responsible for this story: Claudia Carpenter at ccarpenter@bloomberg.net; James Poole at jpoole4@bloomberg.net. |
