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 Posted - 02/08/2008 : 10:54:30
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Copper Heads for Biggest Weekly Gain in 9 Months on Supply Cuts
By Claudia Carpenter
Feb. 8 (Bloomberg) -- Copper in London headed for its biggest weekly advance in nine months on speculation reduced output from Codelco, the world's biggest producer, and cutbacks in China will lower global supplies. All industrial metals rose.
Codelco's copper production declined 5.3 percent in 2007, its largest drop since 1991, Chilean newspaper El Mercurio reported yesterday, citing an internal company document. Jiangxi Copper Co., China's second-largest producer, said Feb. 4 output at its smelter slid to 60 percent to 70 percent of normal production after snowstorms hampered power supplies.
``Codelco's production was a bit on the low side and combined with problems in China it's all helping copper,'' said Dan Smith, an analyst at Standard Chartered Plc in London. The bank is reviewing its forecast that copper supplies will exceed demand by 360,000 tons, he said.
Copper for delivery in three months rose $130, or 1.7 percent, to $7,670 a metric ton as of 12:02 p.m. on the London Metal Exchange after earlier gaining to $7,719.25, the highest since Nov. 1. Prices are up 6.1 percent this week, heading for the biggest weekly gain since May 4.
Futures for March delivery gained 2.6 cents to $3.48 a pound on the Comex division of the New York Mercantile Exchange.
Prices in London have climbed 15 percent this year compared with a 6.6 percent increase in the UBS Bloomberg Constant Maturity Commodity Index of 26 raw materials. Copper last year had its smallest annual gain, 5.5 percent, since 2002 as demand in the U.S. declined. The metal is down from a record $8,800 in May 2006.
``The bulk of the price weakness is behind the copper market,'' Natixis Commodity Markets Ltd. wrote in a report yesterday.
Inventories Drop
LME copper inventories fell 2,725 tons to 166,750 tons, the lowest since Oct. 30, according to the exchange's daily warehouse report today. Stockpiles have slumped 16 percent this year and almost 39,000 more tons are scheduled for withdrawal, according to the exchange.
``With LME stockpiles coming down, copper is the one metal that is still generally tight,'' Smith said. Aluminum stockpiles this year have climbed 2.6 percent, lead supplies are up 7.8 percent and inventories of zinc have increased 30 percent, according to LME figures.
Investment demand for industrial metals such as copper ``is starting to pick up a bit more now'' after lagging agriculture and precious metals the last 18 months, said Nik Bienkowski, London-based head of research at ETF Securities Ltd., which has developed investment products to track commodities.
Its ETFS Copper, a security that reflects the metal's price, gained 3.6 percent today on the London Stock Exchange, the biggest rise since Jan. 29.
Aluminum increased $22 to $2,705 a ton. Lead advanced $105, or 3.8 percent, to $2,885 a ton, nickel rose $329 to $27,779 a ton and zinc gained $30 to $2,380 a ton. Tin rose $225 to $17,075 a ton.
To graph technical gauges for copper: Moving Averages Relative Strength Index Fibonacci Back Test Technical Gauges
To contact the reporter on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net or ccarpenter2@bloomberg.net
Last Updated: February 8, 2008 07:37 EST
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Cu heads for biggest weekly gain in 9 months
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