Tags: Copper Hits 10 | 000 on Hope Recovery Will Spur Demand

Copper Rises to $10,000 a Metric Ton on Speculation Recovery Will Spur Demand

Thursday, 03 Feb 2011 08:48 AM

Copper rose to records in London and New York, reaching $10,000 a metric ton for the first time on speculation recovering economies will spur demand.

Prices also gained today as Xstrata Plc closed copper operations at Mount Isa in Australia because of a storm. Orders to draw copper from inventories tracked by the London Metal Exchange jumped the most in more than three weeks. Figures due tomorrow will show stronger hiring in the U.S., according to economists surveyed by Bloomberg.

“The market remains buoyed by strong economic data and the prospect of decent U.S. payrolls tomorrow,” said David Thurtell, an analyst at Citigroup Inc. in London.

Copper for three-month delivery on the LME climbed as high as $10,000 a ton and was up $2 at $9,947 at 11:51 a.m. local time. Copper for March delivery slipped 0.15 cent to $4.5425 a pound on the Comex in New York after touching $4.58. Tin gained to an all-time high for a 10th day in a row.

Copper has tripled since 2008, when the U.S. was stuck in the worst recession since the Great Depression. Prices surged 30 percent in 2010 as LME inventories shrank 25 percent, the first annual decline since 2004.

Industrial-metals demand has been gaining since 2009’s second half, according to Credit Agricole SA. Mining companies have failed to keep pace with demand because new reserves are harder to find and metal from ore is declining. Copper supplies may lag behind demand by 822,000 tons this year, more than double last year’s deficit, according to Barclays Capital.

Supply Concern

Copper may advance in the “near term” because of concern about supply, Xstrata Mount Isa Mines Chief Operating Officer Steve de Kruijff said in an interview on Bloomberg Television.

“It’s just another threat to supply, and all the little problems seem to add up,” Citigroup’s Thurtell said. “In a tight market, shorts get nervous about even the most minor disruptions,” he said, referring to bets on lower prices.

Markets in China, the world’s biggest consumer, are closed for the weeklong Lunar New Year holiday. “There isn’t a lot of commitment to a sharp move in prices either up or down” with China shut, and copper may encounter resistance above $10,000, Thurtell said.

Copper prices may consolidate this year in a range from $9,500 to $10,500 a ton, said Daniel Major, an analyst at RBS Global Banking & Markets in London. “Supportive underlying fundamentals will likely provide strong price support during periods of investor risk aversion” compared with other commodities, he said.

Canceled Warrants

“We expect physical tightness and critical inventories to drive prices well above $10,000 a ton 2012-14,” Major said.

Canceled warrants, as the inventory orders are called, jumped 15 percent to 15,925 tons today, daily exchange figures showed. The gain was the biggest since Jan. 10. LME copper stockpiles, up 4.5 percent this year, rose 700 tons to 394,475 tons.

Prices gained this week as figures showed stronger manufacturing in the U.S., Europe, the U.K., China and India. A report due at 1:30 p.m. London time tomorrow may show employers in the U.S. raised payrolls by 140,000 last month, more than December’s increase of 103,000, economists said.

Tin for three-month delivery on the LME was unchanged at $30,650 a ton after reaching a record $30,920. Prices are up 14 percent this year. PT Timah, the Indonesian company that’s the biggest supplier of tin worldwide, said on Jan. 14 its production may drop for a fourth straight year in 2011.

“Like copper, bottlenecks on the supply side are supporting prices,” Commerzbank AG said in a report today. “The Peruvian mining ministry has reported lately that mining output fell last year by almost 10 percent to nearly 33,848 tons.”

Aluminum for three-month delivery added 0.6 percent to $2,539 a ton and lead gained 0.3 percent to $2,573.25 a ton. Zinc rose 0.6 percent to $2,491 a ton and nickel fell 0.4 percent to $27,899 a ton.

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Copper rose to records in London and New York, reaching $10,000 a metric ton for the first time on speculation recovering economies will spur demand.Prices also gained today as Xstrata Plc closed copper operations at Mount Isa in Australia because of a storm. Orders to draw...
Copper Hits 10,000 on Hope Recovery Will Spur Demand
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