Copper Futures Have Biggest Gain in 2 Months on Housing Report
By Claudia Carpenter
April 16 (Bloomberg) -- Copper futures in New York had their
biggest gain in two months after a government report showed a
surge in U.S. housing starts last month, reviving expectations
for increased metal demand.
Builders started work on new homes at an annual pace of
2.007 million, up 6.4 percent from February, the Commerce
Department said. Economists expected 1.9 million, the median
estimate in a Bloomberg News survey. Copper fell to a one-month
low earlier this week after an April 9 report showed hedge funds
and other speculators had reduced their holdings of the metal.
``The housing starts were good, and that brought the funds
back into the market to buy,'' said Warren Gelman, president of
St. Louis-based Kataman Metals Inc., which supplies recycled
copper to automakers and builders.
Copper for May delivery rose 5.4 cents, or 4.2 percent, to
$1.3425 a pound on the Comex division of the New York Mercantile
Exchange, the biggest one-day gain for a most-active contract
since Feb. 17. Prices, which reached an eight-year high of $1.403
on March 2, rose 2.9 percent this week, the first weekly gain in
four weeks.
The rally accelerated after prices rose above $1.2975,
triggering buying by some large speculators while others bought
futures back that they had sold earlier expecting prices to keep
falling, Gelman said. ``There was short-covering and new
buying,'' he said.
On the London Metal Exchange, copper for delivery in three
months rose $74 to $2,919 a metric ton ($1.324 a pound).
Mining Shares
Shares of Phelps Dodge Corp., the world's second-biggest
copper producer, rose $1.55 to $75.10 at 2 p.m. in New York Stock
Exchange composite trading, climbing for a second day. The stock
had plunged 12 percent the previous five sessions as copper
prices fell. New Orleans-based Freeport-McMoRan Copper & Gold
Inc. rose 62 cents to $35.91.
Codelco, owned by Chile's government, is the world's biggest
copper producer.
The lowest interest rates in more than four decades have
fueled a U.S. housing boom. Construction is the biggest use for
copper, accounting for about 40 percent of demand, according to
the New York-based Copper Development Association.
Demand is growing at a time when the world is expected to
produce 500,000 metric tons less than it will use this year,
forcing manufacturers to dig deeper into inventories, Phelps
Dodge forecast last month.
Open interest in copper futures, or the number of contracts
held by traders and investors, fell 7.9 percent as of April 6
compared with a week earlier, the fourth decline in six weeks,
according to the most recent report by the Commodity Futures
Trading Commission.
Hedge-Fund Holdings
The number of contracts purchased by hedge funds and other
speculators, minus those sold, fell 38 percent to 9,209 copper
futures, the lowest ``net-long'' amount since July 1, the
commission said last week. An updated tally will be released
after the close of trading today. Should investors sell more
futures than they buy, it will be the first ``net short'' in
copper futures since May 13, 2003.
Copper prices have climbed 83 percent in the past year,
fueled by increased demand in China, the world's biggest copper
consumer. China's economy grew 9.7 percent in the first quarter,
the National Bureau of Statistics in Beijing said in a statement
yesterday.
The Chinese government has taken steps to slow the economy,
leading to concern that demand for cars, homes and other goods
that contain copper would ease. Copper stockpiles in the six
warehouses registered by the Shanghai Futures Exchange rose 0.65
percent this week.
Chinese Demand
``There is a question whether this is the beginning of a
negative trend or a short-term measure which is going to create
an environment of more sustained growth in China rather than the
unsustainable type of growth we've been seeing,'' said James
Koppel, a managing director at SG Corporate & Investment Banking,
a division of France's Societe Generale SA.
Warehouses approved by the London Metal Exchange, the
world's biggest metals market, held 159,900 metric tons, down
2,950 tons today, and extending this year's decline to 63
percent. Stockpiles are the lowest since July 1997.
--With reporting by Helen Yuan in Beijing. Editors: Stroth,
McKiernan, Stroth.
Gartman with his short is sucking big time |
