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Gold/Mining/Energy : Copper - analysis -- Ignore unavailable to you. Want to Upgrade?

To: Robert Douglas who wrote (229)	1/4/2001 3:32:33 PM
From: Stephen O	Read Replies (1) \| Respond to of 2131

Copper Rises on Expectations That Lower Rates Will Boost Demand New York, Jan. 3 (Bloomberg) -- Copper rose for the first time in three sessions on speculation that an unexpected cut in interest rates by the Federal Reserve will bolster U.S. demand for copper by stimulating the economy. ``This is just the medicine we needed,'' said Rick Hirsch, president of Stamford, Connecticut-based Sogemin Metals Inc., a subsidiary of Belgian mining company Union Miniere SA. ``Lower interest rates will turn around the chemical and automobile industries and manufacturing.'' Federal Reserve policy-makers cut interest rates for the first time in two years in an attempt to keep the economy from weakening further. Prices had fallen 14 percent from a three-year high in September on concern that a slowdown in the U.S. would reduce demand for copper wire and pipes. Copper for March delivery rose 0.55 cent, or 0.7 percent, to 81.7 cents a pound on the Comex division of the New York Mercantile Exchange. Prices had dropped 4.5 percent in the previous two session, and the March contract was down 60 cents at 80.55 cents just before the announcement of the interest rate cut. The Fed's policy-setting Open Market Committee cut the overnight bank lending rate to 6 percent from 6.5 percent. Copper prices have been falling on signs that demand may already be slowing. General Motors Corp., Ford Motor Co. and DaimlerChrysler AG said today that their U.S. vehicle sales fell in December as consumer confidence declined and winter storms kept buyers away from showrooms. An automobile contains about 50 pounds of copper. Copper inventories in LME-monitored warehouses around the world have risen 8.3 percent from a two-year low on Dec. 15, a possible sign of weakening demand. Inventories had plunged 57 percent during the previous year on strong global demand. Anti-Recession Move ``What the Fed has done today is signal that just as it was willing to slow the economy down with higher interest rates, it is more than willing to stop it from going into recession,'' said David Threlkeld, president of Resolved Inc., a copper-trading company in Scottsdale, Arizona. ``Everybody was betting that the U.S. economy would go into recession, and therefore demand for copper -- in fact demand for everything -- would go down,'' he said. ``The Fed today has certainly put people on notice to sell at your peril.'' In London, copper for delivery in three months fell $30.50, or 1.7 percent, to $1,740 a metric ton (78.93 cents a pound) on the London Metal Exchange. Trading had ended in London before the Fed announcement. --Claudia Carpenter in the New York newsroom (212) 318-2346 or at ccarpenter2@bloomberg.net with reporting by Noam Nuesner and Vincent Del Giudice in Washington and Alison Fitzgerald in Detroit/jb