BLBG: Copper Rebounds as Manufacturers Take Advantage of Recent Drop
By Claudia Carpenter
Jan. 25 (Bloomberg) -- Copper rebounded in London as some manufacturers took advantage of two weeks of price declines.
Inventories of copper in warehouses monitored by the London Metal Exchange dropped for a second day, signaling increased demand. Prices declined 1 percent the past two weeks as steps to slow growth in China, the world’s largest buyer of copper, heightened concerns that demand may weaken.
“We had some Middle Eastern consumer buying this morning on the cable wiring side,” said Herwig Schmidt, head of sales in London at Triland Metals Ltd., a trader on the LME. “That was quite encouraging.”
Copper for delivery on the London Metal Exchange rose $8, or 0.1 percent, to $7,398 a metric ton by 9:19 a.m. in London. Prices earlier fell as much as 1 percent. The futures for delivery in March advanced 0.3 percent to $3.36 a pound on the Comex division of the New York Mercantile Exchange.
Inventories in LME-monitored warehouses fell 800 tons to 533,400 tons, according to the exchange’s daily warehouse report today.
China’s government has moved to rein in record lending that contributed to copper more than doubling last year. The central bank on Jan. 12 increased banks’ reserve requirements for the first time since June 2008.
In the U.S., the second-biggest buyer of copper, existing home sales probably dropped 9.8 percent in December, economists said before an industry report today.
Copper is often taken as an indicator for the world economy as it is used in construction and automobiles.
Best Pick
Copper remains the best pick among industrial metals as China’s demand is expected to “remain robust,” Yu Yingxi, an analyst at Barclays Capital, said at a conference Jan. 23.
The metal may advance to a record $10,000 a ton this year, driven by industrial demand in China and buying to hedge against inflation, Shen Haihua, an investment manager at HFZ Capital Management Ltd., said at the same conference in Shanghai. Prices climbed to a record $8,940 in July 2008.
Among other metals for delivery in three months, zinc climbed 0.2 percent to $2,355 a ton. Aluminum increased 0.1 percent to $2,234 a ton, nickel added 0.5 percent to $18,400 a ton and lead advanced 1.1 percent to $2,261.50 a ton. Tin jumped 0.4 percent to $17,850 a ton.
To contact the reporter on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net
