BLBG:Copper Gains Most in Two Weeks as European Growth Fuels Demand Speculation
Copper rose the most in two weeks in London as stronger-than-estimated European economic growth fueled speculation demand will maintain its pace.
Gross domestic product in the euro area gained 0.8 percent from the fourth quarter, the European Union’s statistics office said today. Economists had forecast 0.6 percent growth, according to a Bloomberg News survey. Prices also climbed as the dollar weakened, making metals priced in the currency cheaper in terms of other monies.
The global economic recovery “indicates sustainably high copper demand that cannot even be harmed by China’s restrictive interest-rate policy or the economic weakness of certain countries,” smelter Aurubis AG said today. “The fundamental conditions that suggest a production deficit and thus represent the basis for a high price level in 2011 are intact.”
Copper for three-month delivery gained $126, or 1.4 percent, to $8,856 a metric ton by 10:25 a.m. on the London Metal Exchange. Prices rose as much as 1.9 percent, the most since April 28. The metal for July delivery increased 1.2 percent to $4.0185 a pound on the Comex in New York.
German gross domestic product jumped 1.5 percent in the first quarter from the prior three months and French GDP rose 1 percent, exceeding economists’ median forecasts of 0.9 percent and 0.6 percent respectively, figures showed today. ThyssenKrupp AG, Germany’s largest steelmaker, said first-half profit rose 35 percent on higher demand for the metal.
Weaker Dollar
The U.S. Dollar Index, a six-currency gauge of the greenback’s strength, fell as much as 0.6 percent, spurring demand for commodities as an alternative investment. Movement by the U.S. currency was a “key driver of intraday price action for most of the commodities” for the past two days, said Daniel Major, an analyst at RBS Global Banking & Markets in London.
“The trend in copper stocks in the metal exchanges’ warehouses will be a critical indication of the future market trend,” along with the strength of physical demand, said Hamburg-based Aurubis, the largest European copper smelter. The company reported higher first-half profit after increased metals prices boosted sales.
Copper stockpiles tracked by the LME are up 34 percent from the 2010 low on Dec. 10. Today they rose 800 tons to 468,525 tons, exchange figures showed, capping a 13th weekly climb in 14 weeks. Canceled warrants, or orders to draw metal from warehouses, increased 3,675 tons to 19,200 tons.
Aluminum for three-month delivery on the LME advanced 0.2 percent to $2,620 a ton, zinc increased 2 percent to $2,185.75 a ton and lead gained 1.2 percent to $2,336 a ton. Nickel climbed 0.8 percent to $24,735 a ton and tin increased 0.3 percent to $29,400 a ton.
To contact the reporter on this story: Agnieszka Troszkiewicz in London at atroszkiewic@bloomberg.net
