BLBG: Copper Heads for First Weekly Gain in Seven on Growth Outlook
May 28 (Bloomberg) -- Copper is headed for its first weekly advance in seven on speculation demand for raw materials will increase as the U.S. economy improves.
The recovery in the U.S. and globally is “on track,” Federal Reserve Bank of St. Louis President James Bullard said yesterday. Purchases of new U.S. homes jumped last month and orders for durable goods rose, government data showed May 26. Copper, used in construction and electrical equipment, has gained 1.7 percent this week.
“The U.S. economy appears to have been recovering and the economy in Europe looks not too bad,” said Hwang Il Doo, a senior trader with KEB Futures Co. in Seoul. China-led growth in Asia will also “provide support” for metals, he said.
Three-month copper on the London Metal Exchange reached a two-week high of $7,007 a metric ton today and last traded at $6,953 at 11:50 a.m. in Singapore. Prices have lost 6.3 percent this month, the biggest such drop since January, as sovereign debt risks in Europe threatened to slow growth in the region.
Copper and other metals jumped yesterday as stocks surged and the euro snapped a three-day decline after China said it remains a long-term investor in Europe. The Reuters/Jefferies CRB Index of commodities posted its biggest gain since March.
Inventories of copper monitored by the London Metal Exchange fell 1,275 tons to 477,775 tons yesterday and are heading for their third straight monthly decline.
Holiday, Euro Risk
“We may see some profit-taking ahead of the three-day weekend in the U.S. and U.K. and because of the dollar’s rebound against the euro today,” Hwang said. “If copper holds above $7,000, we may see the next target at $7,200.”
Markets in U.K. will be closed on May 31 for the Spring Bank Holiday and in the U.S. for the Memorial Day holiday.
The euro dropped to $1.2295 from $1.2362 in New York yesterday when the 16-nation currency rallied 1.5 percent. It has fallen 7.3 percent since April 30 and is heading for its sixth straight monthly loss.
Copper for September delivery rose 0.8 percent to 55,730 yuan ($8,159) a ton on the Shanghai Futures Exchange.
Aluminum in London was unchanged at $2,065 a ton after gaining 2.5 percent yesterday. The metal has dropped 8.4 percent this month, the biggest such decline since January 2009.
Zinc rose 0.3 percent to $1,945 a ton after advancing 2.7 percent yesterday. Lead gained 0.3 percent to $1,850 after jumping 5.2 percent yesterday. Nickel fell 0.7 percent to $21,650 a ton and tin is yet to trade.
