Copper outlookCopper Rises in N.Y. as Stockpiles Decline, China Imports Rise
By Halia Pavliva
March 3 (Bloomberg) -- Copper rose to the highest price since May 2006 as global stockpiles declined and China, the world's biggest copper user, boosted imports.
Inventories monitored by the London Metal Exchange fell 1.6 percent to 141,375 metric tons and are down 28 percent this year. China imported 128,000 tons of refined copper in January, up from 112,000 tons in December, said Robin Bhar, an analyst at UBS AG in London. Demand has jumped as the dollar fell to a three-year low against the yen and a record against the euro.
``Tight concentrate and scrap markets should see strong cathode imports over the rest of this year,'' Bhar said today in an e-mailed report. ``The underlying trend in industrial metals remains strong, driven in large part by a steadily weakening dollar, which made new lows last week and has little hope in sight.''
Copper futures for May delivery rose 7.5 cents, or 2 percent, to $3.93 a pound at 9:41 a.m. on the Comex division of the New York Mercantile Exchange, after touching $3.9375, the highest for a most-active contract since May 12, 2006. The metal has risen 40 percent in the past year before today.
``Stocks fell again on the LME today,'' Edward Meir, an analyst at MF Global Ltd. in Darien, Connecticut, said today in a report. ``We need to see Shanghai stocks start to `move out' (now that they are arriving via increased imports) if the copper rally is to sustain itself.''
Stockpiles in Shanghai warehouses rose 3,697 metric tons to 48,885 tons, according to data released by the exchange on Feb. 29.
Dollar's Decline
The dollar fell today against the yen on speculation the U.S. economic slump will deepen and cause banks to report more losses from the collapse of the subprime-mortgage market. It was also within 1 cent of its weakest ever against the euro.
``Dollar risks are here to stay,'' Benedikt Germanier, a Stamford, Connecticut-based currency strategist at UBS AG, the second-biggest currency trader, wrote in a note to clients. Investors ``are reducing dollar exposure with U.S. downside growth risks,'' he said.
The UBS Bloomberg Constant Maturity Commodity Index of 26 futures rose as much as 1.8 percent, after reaching a record 1,573.838 on Feb. 29. The index has gained 19 percent this year before today.
On the LME, copper for delivery in three months rose $170, or 2 percent, to $8,600 a ton. The metal had advanced 40 percent in the past year before today.
To contact the reporter on this story: Halia Pavliva in New York at hpavliva@bloomberg.net .
Last Updated: March 3, 2008 09:52 EST