BLBG: Copper Rises in N.Y. as Silver, Gold Lead Commodities Higher
Copper futures rose for the third time in five sessions as higher silver, gold and energy prices boosted investor demand for commodities.
Crude oil traded on the New York Mercantile Exchange jumped as much as 4.8 percent. Gold climbed, capping a third straight monthly gain, and silver led gains among the 19 contracts in the Reuters/Jefferies CRB Index. The gauge added as much as 1.4 percent, heading for a second consecutive weekly increase.
“With the oil moving up and gold being higher, that got people into copper today,” said Michael Gross, an OptionSellers.com analyst in Tampa, Florida. “A lot of traders didn’t want to go home over the weekend short on copper. It’s mostly a technical play, based on gold and oil. The fundamentals are still weak.”
Copper futures for March delivery added 1.1 cents, or 0.7 percent, to $1.4685 a pound on the Comex division of the New York Mercantile Exchange.
Copper, up 4.2 percent in January, capped its first monthly gain since June on speculation that government spending on infrastructure projects in China and the U.S. will increase demand for metals.
President Barack Obama is urging Congress to pass a stimulus plan, valued at more than $800 billion, to revive U.S. growth. The measure is pending in the Senate after passing the House of Representatives earlier this week.
Still, prices were down 0.2 percent this week, a third straight weekly decline, on growing concern the stimulus packaged may not be enough to stem declines in demand.
Stimulus Effect
“There were some unrealistic expectations about what the stimulus plan was going to mean” for copper, Pete Sorrentino, who co-manages $16 billion at Huntington Asset Advisors Inc. in Cincinnati, said yesterday. Copper prices will remain depressed, he said.
Earlier, the price fell as much as 3.5 percent, touching $1.4065, the lowest for a most-active contract since Jan. 23.
The U.S. economy shrank at a 3.8 percent annual pace in the fourth quarter, the steepest drop since 1982, the Commerce Department said today. This week, copper stockpiles monitored by the London Metal Exchange surged 16 percent, the most since Sept. 5.
“The global economy is entrenched in such a deep deleveraging and slowdown that it’s going to be a few months at least before we can see a recovery,” Chip Hanlon, who helps oversee $1.5 billion at Delta Global Advisors in Huntington Beach, California, said in an interview earlier this week.
‘Inadequate’ Cuts
While some mining companies have made or plan production cutbacks to cope with lower demand, the response has been “inadequate,” Deutsche Bank AG analysts led by Michael Lewis in London said today in a report. Of all industrial metals, “we believe copper is the most exposed to further downside pressure,” the analysts said.
Freeport-McMoRan Copper & Gold Inc., the world’s largest publicly traded copper producer, said this week it will sell 9 percent less copper this year than previously forecast. The company posted a $13.9 billion fourth-quarter loss, partly because of falling metal prices.
“Business is weak because of the global economic situation,” Richard Adkerson, Freeport’s chief executive officer, said on a Jan. 26 conference call.
On the LME, copper for delivery in three months dropped $75, or 2.3 percent, to $3,155 a ton ($1.43 a pound). The price reached a record $8,940 on July 2.
Copper may drop to as low as $2,650 a ton this year in London as demand wanes, MF Global Ltd. forecasts.
