BLBG:Copper Advances to a Three-Month High as U.S. Housing Starts May Increase
Copper rose to a three-month high in London before figures that may show builders in the U.S. broke ground on more houses, signaling stronger demand for the metal.
Construction began on 575,000 houses at an annual rate, up 2.7 percent from May, according to the median projection of economists surveyed by Bloomberg News. Copper, used in pipes, wiring and roofing, has gained this month even as concern about Europe’s debt crisis and talks to raise the U.S. borrowing limit spurred some investors to shun risk.
“U.S. housing-starts and building-permits data will be released today, which are important for base-metals prices,” Edelweiss Comtrade Ltd. said in a report.
Copper for three-month delivery gained $116, or 1.2 percent, to $9,810 a metric ton by 10:18 a.m. on the London Metal Exchange. Prices reached $9,826, the highest level since April 12. Copper for September delivery advanced 1.4 percent to $4.4645 a pound on the Comex in New York.
European leaders will meet this week for the second time in a month as they strive to agree on funding a second Greek bailout and buttressing their efforts to stem rising bond yields in the region. In the U.S., President Barack Obama is urging lawmakers to agree to a deficit-cutting deal as the Aug. 2 deadline for raising the debt ceiling approaches.
Sovereign Debts
“The overwhelming worry at the moment is on the macro side, particularly the sovereign-debt risks,” said Duncan Hobbs, an analyst at Macquarie Group Ltd. in London. With those concerns persisting, “it’s difficult to see a really strong rally breaking out.”
Still, LME copper has climbed 4 percent in July as the MSCI World Index of equities dropped 1.9 percent. Concern that supply of the metal may run short of demand bolstered prices as Rio Tinto Group said last week its second-quarter production of mined copper slid 24 percent. Larger rival BHP Billiton Ltd. is due to release quarterly figures tomorrow.
“Even with debt-default jitters in Europe and the United States remaining a constant head wind for global growth prospects, base-metals prices have barely budged,” Edelweiss said.
China, the world’s biggest copper consumer, will have to import more of the metal in the second half than in the first six months, which will help drive prices to new highs in the fourth quarter, said Ren Gang, head of Maike Futures Co.’s research department.
‘Compelling Stories’
“Physical market conditions are generally improving” in China, Macquarie’s Hobbs said. “Investors outside of China looking at base-metals markets see compelling fundamental stories in a number of markets.”
Open interest in LME copper futures, or the number of contracts outstanding, declined 0.5 percent to 455,663 lots on July 15 after reaching the highest level since April 19 as of July 13, exchange data showed.
“While physical metals demand has remained resilient during the ongoing soft patch in the economy, investors have started to build up fresh exposure to the sector, evidenced by rising open interest across LME futures contracts,” Credit Suisse Group AG analysts said in a report today.
Zinc for three-month delivery on the LME rose 1.9 percent to $2,478 a ton. Orders to withdraw the metal from New Orleans warehouses rose 1,100 tons to 48,900 tons after surging more than sixfold yesterday.
Aluminum climbed 0.7 percent to $2,514 a ton and lead gained 1.5 percent to $2,770 a ton. Nickel added 1.2 percent to $24,075 a ton and tin advanced 1.4 percent to $27,750 a ton.
To contact the reporter on this story: Agnieszka Troszkiewicz in London at atroszkiewic@bloomberg.net
To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net
