BS: Copper Advances to One-Week High in London as Dollar Weakens
By Anna Stablum
March 17 (Bloomberg) -- Copper rose to the highest price in a week in London as a weaker dollar spurred demand for alternative investments and stockpiles continued to shrink.
The U.S. Dollar Index, a six-currency gauge of the greenback’s value, fell for a second day, sliding as much as 0.3 percent. The index retreated after the Federal Reserve repeated a pledge to keep its main interest rate near zero for an “extended period” yesterday. Inventories monitored by the London Metal Exchange declined for an 11th day.
“The Fed is keeping the pedal to the metal,” said David Thurtell, an analyst at Citigroup Inc. in London. “Copper stocks keep declining and the dollar is weakening.”
Copper for delivery in three months gained $113, or 1.5 percent, to $7,518 a metric ton at 10:08 a.m. on the LME. The contract climbed as high as $7,535, the highest intraday level since March 10. Copper for May delivery added 1.3 percent to $3.408 a pound on the Comex in New York. All of the six main metals traded on the LME rose, with lead advancing the most.
LME copper will increase to $8,045 a ton in six months, Jeffrey Currie, an analyst at Goldman Sachs Group Inc., said yesterday in a report. It will trade at $7,825 a year from now, he predicted. Supplies probably will tighten further as demand in developed nations improves, according to Currie. The bank also said it expects zinc to gain.
Rate Target
The dollar index slid to its lowest intraday level since Feb. 4. A weaker dollar makes metals priced in the currency cheaper for holders of other monies.
The Fed has kept the rate target for overnight loans between banks in a range of zero to 0.25 percent since December 2008 to boost economic activity. Policy makers began using the “extended period” language in March 2009 and have repeated it at each meeting since then. The U.S. is the world’s second- largest copper user after China.
Stockpiles of copper in LME-monitored warehouses fell to 525,575 tons, the lowest level since Jan. 18. Bookings to remove metal from warehouses slid for a third day, declining 6.7 percent to 21,600 tons and extending this week’s retreat to 24 percent.
Zinc for three-month delivery on the LME rose 2.2 percent to $2,357 a ton. Prices probably will climb as old mines go out of service, resulting in constricted supplies in 12 to 24 months, Goldman Sachs said. The metal, used to rust-proof steel, will trade at $2,555 in six months and $2,590 in a year, according to the bank.
Nickel rose 1.6 percent to $22,240 a ton, extending this year’s gain to 20 percent, the largest among the six main LME metals. BHP Billiton Ltd., the biggest mining company, halted production at its Australian Kwinana refinery on March 15 because of a lack of hydrogen gas.
Aluminum for three-month delivery gained 1.2 percent to $2,284 a ton and lead advanced 2.6 percent to $2,278 a ton. Tin climbed 0.9 percent to $17,699 a ton.
--With assistance by Craig Torres and Scott Lanman in Washington and Jason Scott in Perth. Editors: Dan Weeks, John Deane.
To contact the reporter on the story: Anna Stablum in London at astablum@bloomberg.net.
To contact the editor responsible for this story: Stuart Wallace at swallace6@bloomberg.net.
