BLBG: Copper Heads for Best Week in Five Months as Inventory Drop Signals Demand
Copper rose for a fifth straight day, heading for the biggest weekly gain since February, as shrinking inventories signaled an improved outlook for demand.
Stockpiles tracked by the London Metal Exchange have dropped for 22 straight weeks, the longest slide since 2004. Bookings to remove metal from warehouses increased 15 percent this week, the most in two months. Inventories also contracted in China, the world’s biggest user of the metal.
“Supply dynamics look quite tight over the next couple of years, so we’d expect to see a growing deficit eating progressively into current stock levels,” said Nic Brown, an analyst at Natixis Commodity Markets Ltd. in London.
Copper futures for September delivery gained 2.2 cents, or 0.7 percent, to $3.1865 a pound at 10:43 a.m. on the Comex in New York. A close at that price would leave the metal up 8.8 percent this week, the most since the week ended Feb. 19.
The metal also gained this week as equities rallied, signaling rising optimism for global growth. The MSCI Word Index of shares was up 1.9 percent this week through yesterday.
“The falling inventories have been the driving force for prices,” said Wayne Atwell, a managing director at Casimir Capital in New York. “Sentiment is improving, but people are still feeling nervous. I would expect copper to drive higher through the end of the summer, but it won’t run away.”
Before today, copper dropped 5.4 percent this year on concern that growth will slow, limiting demand for metal, because of China’s moves to cool its economy, Europe’s sovereign-debt crisis and high U.S. unemployment.
“After the recent bounce, there may yet be some setbacks, but we would see any corrections as good buying opportunities,” Brown of Natixis said.
On the LME, copper for delivery in three months added $14.50, or 0.2 percent, to $7,024.50 a metric ton ($3.19 a pound). Nickel, tin and lead prices also climbed. Aluminum and zinc fell.
To contact the reporters on the story: Anna Stablum in London at astablum@bloomberg.net; Millie Munshi in New York at mmunshi@bloomberg.net.
