BLBG: Copper Climbs to Record as Demand Outpaces Supply on Recovering Economy
Copper advanced to a record on speculation demand will outpace supply as the global economy extends a recovery and as investors sought to hedge against a declining dollar.
Copper for three-month delivery gained 0.8 percent to $9,774.75 a metric ton on the London Metal Exchange, surpassing the previous peak of $9,754 a ton on Jan. 4. All six LME base metals advanced, led by nickel.
“Commodities are getting a boost from the weaker dollar,” said Chen Wenbin, an analyst at International Trade Futures Co. “Short-term fundamentals are weak but medium- to longer-term fundamentals are bullish for most metals, especially copper.”
Copper, often regarded as an economic gauge because it’s used in construction and electrical applications, surged 30 percent in 2010 as the global economy rebounded from the worst recession since World War II. Rising profits in the U.S., including better-than-expected earnings at Apple Inc. and International Business Machines Corp., added to signs the recovery is on track.
April-delivery metal on the Shanghai Futures Exchange gained as much as 1.3 percent to a two-week high of 72,950 yuan ($11,078) a ton and ended at 72,900 yuan. Futures on the Comex in New York climbed 0.7 percent to $4.4595 a pound.
The world may have a shortage of 500,000 tons to 600,000 tons of refined copper in 2011, according to JPMorgan Securities Ltd. Macquarie Group Ltd. estimated the deficit at 550,000 tons. The International Copper Study Group has predicted a shortfall of 435,000 tons.
Positive Sentiment
The dollar fell toward a five-week low against the euro and dropped to the lowest in two weeks versus the yen on speculation a sluggish recovery in housing and labor markets will deter the Federal Reserve from raising interest rates, boosting the appeal of dollar-denominated commodities.
“Sentiment in the market today is very positive, judging from the stock markets,” said Qin Yunlong, an analyst at Jinpeng International Futures Co.
Asian stocks rose, driving the regional benchmark MSCI Asia Pacific Index to the highest level in more than two years amid speculation China’s steps to slow inflation won’t curb its expansion. Economists expect a report tomorrow to show gross domestic product last year grew more than 9 percent.
Aluminum in London gained 0.6 percent to $2,465 a ton, zinc rose 0.7 percent to $2,453 a ton and lead added 0.9 percent to $2,648 a ton. Nickel climbed 1.1 percent to $26,380 a ton, and tin increased 1 percent to $27,200 a ton.
To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net
