Copper May Rise as Lower Stocks Fuel Back-to-Back Monthly Gains
2012-02-29 12:59:32.299 GMT
By Maria Kolesnikova
Feb. 29 (Bloomberg) -- Copper, heading for the first back- to-back monthly gains since July in New York, may rise as dwindling inventories signal steady demand and industrial production beats estimates in Asian countries.
Stockpiles of copper monitored by the London Metal Exchange dropped for a fifth month and are at the lowest level since August 2009, daily figures showed. Japan and South Korea reported output that topped forecasts in January. The nations were respectively the fourth- and fifth-biggest global copper consumers in 2010, according to researcher CRU.
“Players from physical traders to pure speculators secure metal in anticipation of future demand,” Andrey Kryuchenkov, an analyst at VTB Capital in London, said in a report today. “This week the market could still benefit from improved sentiment on the broader market.”
Copper for May delivery gained 0.1 percent to $3.9245 a pound by 7:42 a.m. on the Comex in New York. Prices are up 3.5 percent this month and 14 percent this year. Copper for three- month delivery rose 0.2 percent to $8,619 a metric ton on the London Metal Exchange.
LME stocks of the metal, down 20 percent this year, dropped
10 percent to 296,425 tons in February. Inventories held in Asian warehouses shrank for a ninth month. The Asian sites are the delivery points closest to China, the world’s biggest consumer of copper.
Orders to remove copper from LME warehouses climbed 5.7 percent to 93,925 tons, the highest level since Feb. 2, on gains in St. Louis and Chicago. That pared February’s drop to 3.3 percent after a fourfold surge in the prior two months.
Japanese output rose 2 percent from the prior month, the Trade Ministry said, beating the median estimate of 1.5 percent in a Bloomberg News survey of analysts. Korean production was up
3.3 percent, a government report showed, versus a forecast 0.5 percent decline. A Chinese manufacturing index for February due tomorrow will show a third expansion, a separate survey indicated.
“Economic data remains positive,” Tobias Merath, head of commodity research at Credit Suisse Group AG’s private-banking unit, said in a report.
Prices also increased as the European Central Bank allotted
529.5 billion euros ($712 billion) in three-year funds to lenders, potentially boosting bond and equity markets.
Immediate-delivery copper’s premium to the three-month contract on the LME narrowed to $3.50 yesterday from $19 on Feb.
27. The spread moved into backwardation, which may signal concern about supply, on Feb. 23.
Copper held in the ETF Securities Ltd. exchange-traded product that’s physically backed by the metal jumped 17 percent from the prior day to 3,711.8 tons yesterday, figures on the company’s website showed.
Aluminum, nickel, zinc, lead and tin gained on the LME.
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