ReportCopper Gains on Concern Stockpiles May Fail to Cover Shortfall
By Chanyaporn Chanjaroen
Oct. 23 (Bloomberg) -- Copper gained in London on concern that stockpiles of the metal used in power cables and plumbing may fail to cover a forecast production shortfall.
Inventory at warehouses monitored by the London Metal Exchange gained 800 metric tons, or 0.7 percent, to 113,075 tons, the LME said in a daily report. Stockpiles are equal to less than three days of global demand. Consumption will beat output by 101,000 tons, Gold Sachs Group Inc. said last month.
That makes it ``easier'' for traders to be ``long,'' or bet prices will gain rather than decline, Adam Rowley, a London- based analyst at Macquarie Bank Ltd., said today by phone. ``Right now you have low inventory.''
Copper for delivery in three months on the LME added $55, or 0.7 percent, to $7,615 a ton as of 10:27 a.m. local time. It has declined 13 percent from the record $8,800 traded on May 11.
Recent economic data showing a slowdown in the U.S. economy, the world's second-largest copper user, aren't ``compelling enough'' for investors to sell short on copper, Rowley said. China is the largest copper-consuming nation.
U.S. industrial production fell 0.6 percent in September, the most in a year, the U.S. Federal Reserve said Oct. 17. Demand for base metals including copper moves in line with industrial output.
``If you go are short, you are counting on a significant slowdown in the economy,'' Rowley said. ``The information we've got isn't compelling enough.''
Use will rise 3.3 percent this year to 17.2 million tons, the Lisbon-based International Copper Study Group said Oct. 2.
Tin Stockpile Slump
LME tin stockpiles dropped 680 metric tons, or 5.4 percent, to 11,970 tons, the exchange said. The decline is the largest since July 26, 2005. Tin for delivery in three months gained $50 to $10,200 a ton.
Zinc rose $15, or 0.4 percent, to $3,985 a ton. The metal, used to protect steel against corrosion, has more than doubled in the past ear. It traded at a record $4,020 on Oct. 17.
Zinc is ``in a huge, huge deficit, and I don't see an improvement until at least the last quarter of 2007,'' said David Thurtell, an analyst at BNP Paribas, in a television interview.
Aluminum advanced $11, or 0.4 percent, to $2,729 a ton and lead increased $20 to $1,520.