Copper Rises to Record in London on U.S. Durable-Goods Increase
2005-11-29 12:45 (New York)
By Stuart Wallace and Simon Casey
Nov. 29 (Bloomberg) -- Copper rose to a record in London
after U.S. durable-goods orders increased in October twice as
much as forecast, signaling strengthening demand from the world's
No. 2 user. Other metals rose to multiyear highs.
Durable-goods orders rose 3.4 percent, the Commerce
Department in Washington said. Economists forecast a 1.5 percent
increase, based on the median of 61 estimates in a Bloomberg
survey. This year the U.S. will consume 3.07 million tons of
copper, which is used in wiring and water pipes, Standard Bank in
London said in a Nov. 1 report. China is the largest user.
``That's positive for base metals,'' including copper, said
Michael Purdy, a trader at ABN Amro Bank in New York. ``Demand is
going to keep on increasing with the world economies improving.''
Copper for delivery in three months on the London Metal
Exchange climbed as high as $4,257 a metric ton, beating the
record set on Nov. 18 by $14. The contract advanced $7, or 0.2
percent, to $4,231 as of 5:07 p.m. local time. Copper has gained
34 percent this year.
Copper also rose after U.S. new home sales unexpectedly
increased to a record last month. Purchases grew 13 percent, the
biggest gain since April 1993, to a 1.424 million annual rate
from 1.26 million in September, the Commerce Department said.
Construction accounts for 48 percent of copper demand,
according to the New York-based Copper Development Association. A
single-family home contains 400 pounds of the metal.
Chinese Auctions
Freeport-McMoRan Copper & Gold Inc. said fourth-quarter
production from its Grasberg mine in Indonesia, the world's
second-largest copper mine, is ``slightly short'' of the
company's targets because of lower-grade ores. Copper output is 5
percent below a target of 480 million pounds, the Baton Rouge,
Louisiana-based company said today in a statement.
Copper prices may fall if China extends sales of stockpiled
metal, analysts said. China's State Reserve Bureau, or SRB, a
government stockpiling agency, must deliver as much as 130,000
metric tons of copper to overseas markets by Dec. 21, the state-
run China Daily said Nov. 24.
The SRB has held auctions for 40,000 tons of inventory this
month and plans to sell 20,000 tons on Nov. 31. It may hold
further sales, said Societe Generale analyst Stephen Briggs.
``There's this huge uncertainty about the Chinese
position,'' London-based Briggs said in an interview today.
Societe Generale is one of the 11 companies that trade on the
floor of the London Metal Exchange.
Production Shortfall
Chinese stockpile sales will increase supply of the metal
amid forecasts that global production this year won't meet
demand. Standard Bank in London said in its report that the
shortfall will be 343,000 tons in 2005.
Inventory tracked by the London Metal Exchange, the Comex
division of the New York Mercantile Exchange and the Shanghai
Futures Exchange is at 149,143 metric tons, according to
Bloomberg data. That's equal to about three days of global usage.
Aluminum, which is used in beverage cans and cars, rose
$5.50, or 0.3 percent, to $2,122 a ton. Earlier it traded as high
as $2,132, beating the 10-year high set yesterday by $13.
Aluminum's production shortfall next year will be 266,000
tons, Macquarie Bank said Oct. 31. The deficit may widen as high
power prices lead companies to close unprofitable smelters.
Pittsburgh-based Alcoa Inc., the world's No. 1 aluminum producer,
said Nov. 23 it will close its 195,000 ton-a-year Eastalco
smelter next month because of the rising cost of electricity.
`Buying All Metals'
Zinc rose $12 to $1,702 a ton. Earlier it traded as high as
$1,705, exceeding yesterday's 15-year high of $1,690.80.
Zinc demand will exceed output by 155,000 tons this year and
by 145,000 tons in 2006, Natexis Commodity Markets said in an
Oct. 31 report.
``We can see that there is no sign that the uptrend in
industrial metal prices is ending,'' said Cai Luoyi, the
Shanghai-based head of research at China International Futures
(Shanghai) Co., in an interview today. ``Funds are buying all
industrial metals.''
Lead rose $3 to $1,020, after earlier trading at a record
$1,020. This year there will be a production shortfall in lead,
used in rechargeable batteries, of 28,000 tons, Barclays Capital
said in an Oct. 19 report. Nickel was unchanged at $13,050 and
tin was $30 higher at $6,130.
--With reporting by Choy Leng Yeong in Seattle. Editor: Carrigan
(jao) |
