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 Posted - 01/18/2008 : 10:19:25
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Copper Gains, Leading Other Metals Higher, on Demand in China
By Claudia Carpenter
Jan. 18 (Bloomberg) -- Copper rose, leading other industrial metals higher, on speculation Chinese wire and pipe manufacturers will replenish stockpiles to ensure output isn't disrupted during the Lunar New Year holiday starting Feb. 6.
Stockpiles of copper in warehouses monitored by the London Metal Exchange have dropped 8.8 percent since Jan. 8, the biggest nine-day decline since July. Copper is heading for its first weekly drop in five weeks on expectations that demand for copper wire and pipes in the U.S. is shrinking.
``You have to take into account seasonal Chinese buying in the beginning of the year ahead of the Chinese new year,'' said Jon Bergtheil, head of global metals strategy at JPMorgan Securities Ltd. in London. ``I don't see any other reason for the decline in inventories when demand is probably falling 8 percent per annum in the U.S.''
Copper for delivery in three months gained $74, or 1.1 percent, to $7,065 a metric ton as of 1:49 p.m. on the London Metal Exchange. Prices are down 3.2 percent this week, heading for the biggest drop and first weekly decline since Dec. 14. The Chinese new year holiday runs Feb. 6 to Feb. 12.
The copper futures contract on the Comex division of the New York Mercantile Exchange advanced 0.6 percent.
Copper inventories on LME dropped 2,325 tons today to 183,225 tons, the lowest since Nov. 21, according to the exchange's daily warehouse report.
``Of all the metals, copper has probably got the best fundamentals as supply of concentrate is still very tight,'' said Peter Sellars, chief executive officer of Sempra Metals Ltd., in a Bloomberg Television interview from Shanghai. ``We expect copper to remain reasonably firm this year.''
Nickel Demand
Nickel climbed $200 to $27,800 a ton. LME-monitored stockpiles have declined 3.2 percent this year after rising more than sixfold last year.
Consumption of nickel has ``improved a little bit'' from last year's low in the third quarter, said Vanessa Davidson, managing consultant of London-based research company CRU. Nickel demand will rise 9 percent after a 2 percent decline last year, leaving a ``small surplus'' this year, she said. Supplies exceeded demand by 76,000 tons last year, according to CRU.
Aluminum rose $5 to $2,444 a ton. Production ``constraints'' will emerge over the next year or two, helping to support prices, said Stephen Briggs, London-based metals economist at Societe Generale, on Bloomberg Television. ``We have a boom in new aluminum capacity and that will wind down now.''
Lead added $19 to $2,549 and tin gained $300 to $16,550 a ton. Zinc declined $9.50 to $2,275.50 a ton, reversing an earlier gain of 1.5 percent.
Following are technical gauges for copper:
20-day moving average 6,936
100-day moving average 7,312
200-day moving average 7,464
14-day relative strength index 54.06
Fibonacci Start End 50% 38.2%
6,317 7,985 7,151 6,954
To contact the reporter on this story:
Claudia Carpenter in London at
ccarpenter2@bloomberg.net or ccarpenter2@bloomberg.net.
Last Updated: January 18, 2008 09:04 EST
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