March 3 (Bloomberg) -- Copper futures closed at the highest price ever as global inventories declined and China, the world's biggest user of the metal, boosted imports.
Stockpiles monitored by the London Metal Exchange fell 1.6 percent to 141,375 metric tons and are down 28 percent this year. China imported 128,000 tons of refined copper in January, up from 112,000 tons in December, said Robin Bhar, an analyst at UBS AG in London. Demand has jumped as the dollar fell to a record against a weighted basket of six major currencies.
“Tight concentrate and scrap markets should see strong cathode imports over the rest of this year,” Bhar said in a report. “The underlying trend in industrial metals remains strong, driven in large part by a steadily weakening dollar, which has little hope in sight.”
Copper futures for May delivery rose 7.35 cents, or 1.9 percent, to $3.9285 a pound on the Comex division of the New York Mercantile Exchange, a record settlement. The price reached $3.9670, the highest for a most-active contract since May 11, 2006, when the metal climbed to an intraday record of $4.04. Copper has jumped 45 percent in the past year.
Manufacturing in the U.S. shrank at the fastest pace in almost five years and construction spending fell the most since 1994 as the economy moved closer to a recession, reports showed today.
“The U.S. economy is maybe going into recession, but the market in China is growing,” which supports copper, Tom Winmill, president of Midas Management Corp., said in an interview on Bloomberg Radio.
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China's Stockpiles
Stockpiles of copper in Shanghai warehouses rose 3,697 metric tons to 48,885 tons, according to data released by the exchange on Feb. 29.
“We need to see Shanghai stocks start to `move out' if the copper rally is to sustain itself.” Edward Meir, an analyst at MF Global Ltd. in Darien, Connecticut, said today in a report.
On ICE Futures U.S., formerly know as the New York Board of Trade, the U.S. Dollar Index, weighted against the euro, yen, pound and three other major currencies, fell to a record 73.354. The euro reached $1.5275, the highest ever.
The dollar index is down 3.9 percent in 2008 on speculation the U.S. economic slump will deepen. The gauge dropped 16 percent in the past 24 months.
“Dollar risks are here to stay,” Benedikt Germanier, a Stamford, Connecticut-based currency strategist at UBS AG, said in a report.
Investors “are reducing dollar exposure with U.S. downside growth risks,” he said.
Copper climbed partly in tandem with other commodities. Crude oil, gasoline, gold, platinum, corn and soybeans rose to records on U.S. futures exchanges.
On the LME, copper for delivery in three months rose $145, or 1.7 percent, to $8,575 a ton ($3.89 a pound). The metal has advanced 42 percent in the past 12 months.
To contact the reporter on this story: Halia Pavliva in New York at hpavliva@bloomberg.net. |
Prospectus
