BLBG: Copper Rebounds From Slump as Dollar Resumes Its Decline
June 23 (Bloomberg) -- Copper rose in London and New York, after dropping the most in four months yesterday, as a weaker dollar made metals cheaper for holders of other currencies.
The U.S. Dollar Index, a gauge of the greenback’s value against six monies, fell as much as 0.6 percent. Copper is being driven by the dollar for now, Robin Bhar, an analyst at Credit Agricole SA’s Calyon unit in London, said by phone. He predicted lower prices for industrial metals, citing skepticism about the potential for a global economic rebound and demand from China.
“I sense disillusionment over the green shoots of recovery and concerns that China’s growth is now slowing,” he said.
Copper for September delivery gained 2.5 percent to $2.1970 a pound on the New York Mercantile Exchange’s Comex division at 8:53 a.m. local time. Copper for three-month delivery rose $79, or 1.7 percent, to $4,840 a metric ton on the London Metal Exchange.
Metals slid yesterday as the World Bank said the global economy’s contraction this year would be more severe than previously forecast. The LME Index of six industrial metals traded on the exchange declined 5.4 percent, the most since Jan. 27, and has slid more than 10 percent from this year’s peak.
“We are probably a bit too high, given the demand and supply fundamentals that we are seeing,” Bhar said. Copper is likely to fall in the third quarter before rebounding in the following three months, according to the analyst, who advised buying the metal when prices dip.
“I don’t really see a collapse in prices much below the $4,000 level” in the next quarter, he said.
European Manufacturing
The European economy showed signs of stabilization as the manufacturing and service industries contracted at the slowest pace in nine months in June, according to a report today. A composite index of both industries for the 16 euro nations rose to a lower-than-expected 44.4, the highest since September, from 44 in May.
“The Eurozone composite PMI fell slightly short of expectations, but still points to the first quarter having seen the worst of the downturn,” David Thurtell, an analyst at Citigroup Inc. in London, said by telephone.
Copper, used in pipes and electrical wiring, has added 56 percent this year on the LME, mainly because of buying from China, the world’s largest consumer of the metal. The Asian nation accounted for 38 percent of global copper demand in the first quarter, 11 percentage points more than a year earlier, Barclays Capital estimates.
Chinese Imports
Chinese buying is expected to slow in the third quarter after the country’s copper imports climbed to a record in May. Imports may drop to about 300,000 tons in the next quarter, said Yoshihiro Nishiyama, marketing director at Pan Pacific Copper Co., Japan’s biggest smelter of the metal.
Imports of copper into China were 748,281 tons in the first quarter and totaled 655,177 tons in April and May, according to customs figures.
Among other LME metals for three-month delivery, nickel rose 1.6 percent at $14,720 a ton. World production outpaced demand in April, the International Nickel Study Group said. Primary nickel production was 109,400 tons, compared with demand of 95,600 tons, it said yesterday.
Aluminum rose 1.9 percent to $1,604 a ton, and lead increased 2.5 percent to $1,642 a ton. Zinc gained 2.1 percent to $1,533 a ton and tin rose 0.7 percent to $14,500 a ton.
