Copper Rises as U.S. Growth May Make Up for Slowdown in China
Copper rose the most in two weeks, paring the first annual decline since 2008, on bets that U.S. growth will buoy metals demand as the economy slows in China.
The U.S. expanded at a rate of 1.8 percent this year and will probably increase 2.1 percent in 2012, according to the median of 70 economist estimates compiled by Bloomberg. A private report yesterday showed more Americans than forecast signed contracts to buy previously owned homes in November. The average house uses about 400 pounds (181 kilograms) of copper in the U.S., the world’s second-biggest consumer.
If the strength of the housing market is “real and just not another head-fake, we could have a potential game-changer on our hands for the U.S. economy going into 2012,” Edward Meir, an analyst at INTL FCStone Inc. in New York, said in a report.
Copper futures for March delivery climbed 2 percent to close at $3.436 a pound at 1:18 p.m. on the Comex in New York, the biggest gain for a most-active contract since Dec. 16. The rally capped a quarterly increase of 9 percent since, the first in a year.
Prices still tumbled 23 percent this year as Europe’s fiscal woes threatened global growth and demand waned in China, the top metals buyer. After reaching a record $4.6575 in February, copper slumped to a 14-month low of $2.994 on Oct. 3.
HSBC Holdings Plc and Markit Economics said today a purchasing managers’ index for China was at 48.7 in December. Readings below 50 signal contraction. The euro is headed for its first back-to-back annual decreases versus the dollar in a decade as the region’s debt crisis worsened.
‘Euro-Zone Situation’
“The euro-zone situation will probably deteriorate and continue to weigh on things,” Matthew Zeman, a strategist at Kingsview Financial in Chicago, said in a telephone interview.
On the London Metal Exchange, copper for delivery in three months rose 2.4 percent to $7,600 a metric ton ($3.45 a pound). Tin, aluminum, lead, nickel and zinc also gained in London.
The LME Index (LMEX) of the six main metals traded on the U.K. exchange has tumbled 22 percent in 2011 after more than doubling in the previous two years. Tin led declines, dropping 29 percent. Aluminum had the smallest loss, falling 18 percent.
Comex floor trading will be closed on Jan. 2 in observance of the New Year’s holiday. The LME also will be shut.
To contact the reporters on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net; Yi Tian in New York at ytian8@bloomberg.net
To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net
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