copper rises London/NYCopper Advances for a Second Day as OECD Raises Growth Forecast
June 24 (Bloomberg) -- Copper rose for a second day in London and New York as the Organization for Economic Cooperation and Development raised its growth forecast, indicating improving demand for metals.
The 30 OECD members’ combined economy will expand by 0.7 percent in 2010, the Paris-based group said today, boosting its estimate for the first time in two years. That helped copper to gain after falling on June 22 by the most in almost five months and slipping yesterday to the lowest since May 28 on the London Metal Exchange before reversing the drop and closing higher.
“The OECD report has had an impact,” Mark Heyhoe, an analyst at Hanson Westhouse Ltd. in London, said by phone. He also said some buyers made purchases to take advantage of this week’s lower prices.
Copper for three-month delivery rose $170, or 3.5 percent, to $4,975 a metric ton, the day’s peak, at 1:34 p.m. on the LME. Copper for September delivery gained 2.2 percent to $2.2615 a pound on the New York Mercantile Exchange’s Comex division.
While the OECD report aided prices, “we are in the midst of the summer, a very slow period, so I would still be looking for another dip,” said Randy North, a trader at RBC Capital Markets in London. Some copper buyers made purchases to cover short positions, or bets that prices would fall, he said.
‘Non-Believers’
The LME Index of the six industrial metals traded on the exchange declined 5.4 percent on June 22, the most since Jan. 27, after the World Bank said the recession will be deeper than it predicted in March.
“There are a lot of non-believers out there that were short,” North said by phone.
Copper, used in pipes and electrical wiring, has added 61 percent this year on the LME. Inventories in warehouses monitored by the London bourse are down 19 percent.
“This has been a function of Chinese strategic stockpiling, market restocking and renewed investment interest in copper,” Toronto-based Tony Robson and other analysts at BMO Capital Markets said yesterday in a report.
While metals demand usually weakens in the Northern Hemisphere’s summer, “any potential pause might be short- lived,” BMO said. “The combination of low inventory levels and limited production offline points to strong fundamentals for copper as we begin a global economic recovery phase.”
Fed Statement
Federal Reserve policy-makers conclude a two-day meeting today, and the Open Market Committee is scheduled to issue a statement at about 7:15 p.m. London time.
“Expectations are mounting that the Fed will use the statement to outline its plans to drain liquidity out of the financial system,” Leon Westgate, an analyst at Standard Bank Group Ltd. in London, said in a note. That would keep inflation under control once the economy recovers, he said.
“Failure to convince the investment community that it will be able to achieve this, without snuffing out signs of a recovery by raising interest rates, may see further money flow into commodities as an inflation hedge,” Westgate said.
Among other LME metals for three-month delivery, aluminum rose 2.5 percent to $1,645 a ton, and lead increased 3.5 percent to $1,674 a ton. Zinc gained 3 percent to $1,565.25 a ton as tin rose 0.9 percent to $14,725 a ton. Nickel was 4.9 percent higher at $15,330 a ton.
To contact the reporter on this story: Anna Stablum in London at astablum@bloomberg.net
Last Updated: June 24, 2009 08:44 EDT