BS: Copper Rises as Demand May Strengthen After China Policy Easing
By Agnieszka Troszkiewicz
Feb. 20 (Bloomberg) -- Copper rose in London, rebounding from the longest losing streak since September, on speculation demand may strengthen after China eased reserve requirements.
The proportion of cash that Chinese lenders must set aside will fall half a percentage point as of Feb. 24, the People’s Bank of China said Feb. 18. The reduction was the second in three months, and the country is the world’s biggest copper consumer. The metal also climbed after money managers increased bets on price gains to the highest level since August.
“The cut is certainly a step in the right direction,” Nic Brown, head of commodity research at Natixis in London, said by e-mail.
Copper for three-month delivery advanced 0.9 percent to $8,249 a metric ton by 12:57 p.m. on the London Metal Exchange. Prices slid 6.7 percent over six sessions before today. Copper for May delivery rose 1 percent to $3.7535 a pound on the Comex in New York, where floor trading is closed today for the Presidents’ Day holiday.
Managed-money funds held net-long positions, or wagers on rising Comex copper prices, of 14,817 futures and options contracts as of Feb. 14, versus 12,298 a week earlier, according to the U.S. Commodity Futures Trading Commission.
“China’s weekend move to reduce its RRR should be supportive, while other reports of bad weather in Chile halting production may also be helpful going forward,” Mark Pervan and Natalie Robertson, analysts at Australia & New Zealand Banking Group Ltd., said in a report today.
Snowfall in Chile
Collahuasi, the world’s third-biggest copper mine, is operating its concentrator plant even after snow fell at the mine site in Chile yesterday, spokeswoman Bernardita Fernandez said by phone today. She had no immediate information on remaining mine operations. Reuters reported the mine suspended operations, citing union leader Cristian Arancibia.
Still, Chinese home prices recorded their worst performance in at least a year in January, the National Statistics Bureau said Feb. 18. The Copper Development Association says construction generates about 40 percent of demand for the metal.
“There are still risks for a retracement in the near term as long as Chinese consumers remain absent,” Stefan Graber, an analyst at Credit Suisse AG, said in a report today.
Stockpiles of copper monitored by the LME dropped for a fourth day to 305,875 tons, the lowest level since Sept. 2, 2009. Inventories shrank for a 20th week in a row last week. Orders to remove copper from LME warehouses, or canceled warrants, declined 3.6 percent to 82,350 tons.
Aluminum, zinc, lead, nickel and tin rose in London.
--Editors: Dan Weeks, Sharon Lindores.
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
