BLBG: Copper Rebounds in London as Technical Charts Signal More Gains
Copper rose for a second day in London, erasing an earlier decline, as technical charts used by some traders signaled further gains. Nickel fell.
The three-month copper contract on the London Metal Exchange climbed above a 21-day moving average, suggesting that prices may continue to climb, according to Barclays Capital analyst Dhiren Sarin in London. Prices fell 4.4 percent the past two weeks and 54 percent last year as the global recession curbed demand.
“Some players are beginning to sense prices may be close to the bottom and are testing the water,” said David Wilson, head of metals research at Societe Generale in London. “I don’t think we’re going to see a strong rebound.”
The three-month copper contract gained $104, or 3.2 percent, to $3,355 a metric ton as of 10:40 a.m. on the LME. The contract increased 5.2 percent on Jan. 23. Prices need to rise above $3,550 a ton “to suggest a strong base,” Sarin said. The 21-day moving average is $3,223 a ton.
Prices dropped 1.2 percent earlier after inventories in warehouses monitored by the London bourse climbed to 439,425 metric tons, the highest since Dec. 23, 2003.
Copper and zinc costs are set to fall for the next two years, Citigroup Inc. said in a report yesterday, easing pressure for mining cutbacks.
“Energy costs have fallen quite sharply recently, so I imagine that has fed through on the mining costs and refinery costs in copper,” SocGen’s Wilson said. “If you look across other metals, there’s been a much sharper reaction from nickel producers.”
Production Cuts
Nickel producers have cut about 20 percent of their 2009 planned output, Wilson said. “It’s surprising that we haven’t seen a similar reaction from copper producers,” he said.
Copper will average $1.25 a pound ($2,756 a ton) this year, down 60 percent from last year’s spot price and leading declines in aluminum, nickel, zinc and lead, according to the Citigroup report.
Aluminum rose $7 to $1,349 a ton, zinc gained $24 to $1,185 a ton and lead advanced $41 to $1,156 a ton.
Nickel declined $325 to $11,775 a ton and tin fell $200 to $12,050 a ton.
