BLBG: Copper Advances for a Second Day in London on Weaker Dollar
Copper rose for a second day in London as the dollar declined and the Organization for Economic Cooperation and Development raised its growth forecast, indicating improving demand for metals.
The 30 OECD members’ combined economy will grow 0.7 percent in 2010, the Paris-based group said, raising its estimate for the first time in two years. The U.S. Dollar Index, a gauge against six currencies, fell on speculation the Federal Reserve will indicate it intends to refrain from raising interest rates.
“The weaker dollar is helping all commodities,” Barbara Lambrecht, an analyst at Commerzbank AG in Frankfurt, said by phone. “The Fed may point to a little bit better economic figures, and that could give the optimists some support.”
Copper for three-month delivery rose as much as $135, or 2.8 percent, to $4,940 a metric ton on the London Metal Exchange. The contract was at $4,930.25 at 11:20 a.m. local time. Copper for September delivery gained 1.3 percent to $2.241 a pound on the New York Mercantile Exchange’s Comex division.
Copper fell yesterday to the lowest since May 28 in LME trading. The LME Index of six industrial metals declined 5.4 percent on June 22, the most since Jan. 27, after the World Bank said the recession will be deeper than it predicted in March.
The gauge rose 48 percent in the year through June 11, recovering from a 49 percent plunge last year.
Copper, used in pipes and electrical wiring, has added 61 percent this year on the LME. Inventories in warehouses monitored by the London bourse are down 19 percent.
‘Market Restocking’
“This has been a function of Chinese strategic stockpiling, market restocking and renewed investment interest in copper,” Toronto-based Tony Robson and other analysts at BMO Capital Markets said yesterday in a report.
While metals demand in the Northern Hemisphere’s summer usually declines, “any potential pause might be short-lived,” BMO said. “The combination of low inventory levels and limited production offline points to strong fundamentals for copper as we begin a global economic recovery phase.”
The Fed’s Open Market Committee is scheduled to issue a statement at about 7:15 p.m. London time as policy makers conclude a two-day meeting. A report on U.S. durable goods scheduled for 1:30 p.m. London time probably will show that orders fell in May for the second time in three months, according to economists’ forecasts.
“People are looking for some kind of light at the end of the tunnel, so they are watching every economic indicator very closely,” Commerzbank’s Lambrecht said. “If it is disappointing, all markets will react.”
Among other LME metals for three-month delivery, aluminum rose 1.6 percent to $1,630 a ton, and lead increased 3 percent to $1,666.25 a ton. Zinc gained 4 percent to $1,580 a ton as tin rose 1 percent to $14,745 a ton. Nickel was 4.4 percent higher at $15,250 a ton.
