BLBG: Copper Climbs as Earthquake in Chile Triggers Supply Concern
Copper prices increased for the first time in four days after an earthquake rattled parts of Chile, the world’s biggest supplier of the metal.
The 4.9-magnitude quake struck about 320 kilometers (200 miles) south of Santiago at 9:56 a.m. local time, the U.S. Geological Survey said. Copper still has plunged 65 percent from a record in May as a global recession curbed demand for the metal used in pipes and wires.
“The earthquake is why copper isn’t down,” said Matthew Zeman, a trader at LaSalle Futures Group in Chicago. “Copper is trying to claw its way uphill. Barring any major supply disruption, it will have a hard time making a big move higher.”
Copper futures for March delivery gained 7.6 cents, or 5.4 percent, to $1.472 a pound on the Comex division of the New York Mercantile Exchange. The price still dropped 3.6 percent this week.
The metal extended gains after President Barack Obama pressed congressional leaders to reach a consensus on an $825 billion stimulus plan in a bid to revive growth.
“There is some optimism and some hope that the stimulus plan will take effect soon and help copper demand,” said Donald Selkin, the chief market strategist at National Securities Corp. in New York.
Demand rebounded after copper earlier touched $1.373, the lowest for a most-active contract since Jan. 2.
‘Just a Bounce’
“Users may be looking to buy at these prices to replenish their supply,” Selkin said. “This is just a bounce within the bearish fundamentals. I don’t see this as the beginning of a bullish move for copper.”
China’s economic slowdown, already the deepest in seven years, is set to worsen, according to economists surveyed by Bloomberg News. The country is the world’s biggest copper buyer.
In the fourth quarter, the U.K. economy had the biggest contraction since 1980, a report showed today. U.S. housing starts in December fell to a record, the government said yesterday.
“All of the negative economic news is not painting a pretty picture on the demand side for copper,” Zeman of LaSalle Futures said. “The outlook doesn’t look too good.”
On the London Metal Exchange, copper for delivery in three months rose $161, or 5.2 percent, to $3,251 a metric ton ($1.47 a pound). The price reached a record $8,940 on July 2.
