BLBG: Copper Jumps to Near One-Month High in Asia as Equities Rally
Copper jumped to the highest in nearly a month in Asia on improved investor sentiment as equities rallied after crude oil surged and the Federal Reserve began purchasing mortgage securities to ease credit conditions.
Futures in London advanced as much as 4.7 percent as the benchmark MSCI Asia Pacific Index gained for a ninth day, on pace for the longest winning streak since August 2004. Copper slumped 54 percent in 2008 as the benchmark posted a record 43 percent decline after turmoil in financial markets dragged the global economy into a recession.
“We’re seeing some spillover of euphoria from the equities markets,” Lin Yougu, research manager at Shanghai Jiuheng Futures Brokerage Co., said today. “There’s no denying demand will be significantly weaker this year, so I doubt the current rally can be sustained,” said Lin.
London Metal Exchange copper advanced to as high as $3,340 a metric ton, the highest since Dec. 11, and traded at $3,335 at 11:45 a.m. Singapore time. March-delivery copper on the Comex division of the New York Mercantile Exchange rose 3.6 percent to $1.5115 a pound.
Copper for March delivery on the Shanghai Futures Exchange surged the exchange-imposed daily limit for a second day, jumping 6 percent from the previous settlement price to 26,240 yuan ($3,838) a ton.
China Tolling
China will allow tax-free imports of copper concentrate and other raw materials for processing into export-bound products, a practice known as tolling, the country’s Ministry of Commerce said Dec. 31.
“There’s also some positive sentiment generated from the resumption of the tolling trade, but all other data we’re getting still paints a bleak picture for the health of the global economy,” said Lin.
U.S. auto sales plunged 36 percent in December, dragging the industry’s annual volume to a 16-year low as the recession ravaged demand. The U.S. is the world’s biggest market for cars and light trucks, which are included in the figures.
Vehicle sales in China, Europe and Japan have also slumped. An average of 50 pounds of copper is used in cars, according to the Copper Development Association.
Among other LME-traded metals, aluminum rose 0.9 percent to $1,564 a ton, zinc added 0.6 percent to $1,308, and lead gained 0.9 percent to $1,130 a ton as of 9:56 a.m. in Singapore.
