Copper Advances, Closes In on Best Start to a Year Since 2003
Copper rose in New York, heading for its best start to a year since 2003, on optimism Greece is progressing in debt-swap talks with bondholders. Tin was on course for its biggest monthly gain since at least July 1989.
Greece aims to complete discussions with bondholders by the end of this week, Prime Minister Lucas Papademos said after a European Union summit. Copper also climbed as London Metal Exchange inventories had the biggest monthly drop since June 2009, Xstrata Plc said its copper output declined and the euro strengthened against the dollar.
“The situation has at least begun to stabilize,” Gayle Berry, an analyst at Barclays Capital in London, said in reference to the euro area’s sovereign-debt crisis. “The fact it’s not getting any worse is in itself an improvement from the end of last year.”
Copper for March delivery advanced 0.8 percent to $3.8575 a pound by 8:02 a.m. on the Comex in New York. Prices are up 12 percent this month. Copper for three-month delivery rose 0.7 percent to $8,487 a metric ton on the LME.
LME copper stocks fell for a 20th session to 330,825 tons, leaving them down 11 percent for the month and at the lowest level since September 2009. Orders to draw the metal from inventories, or canceled warrants, rose 1.4 percent to 97,150 tons, remaining at the highest level since March 2004.
Stronger Euro
The euro rose as much as 0.5 percent against the dollar as Papademos said he is “strongly committed” to reaching an agreement. Gains by the euro against the greenback make dollar- priced metals cheaper for users of the single European currency.
Copper production fell 3 percent last year compared with 2010, said Xstrata, the fourth-biggest producer of the metal. Adverse weather that affected mining at Collahuasi in Chile contributed to the drop, it said.
“Copper’s constructive fundamentals will make it an outperformer among the base metals,” analysts at Morgan Stanley including Peter Richardson in Melbourne said in a report dated yesterday. “Supply-side difficulties remain, which should keep copper prices elevated.”
As much as 6.3 million tons of production was lost as a result of labor disputes, weather effects and declining ore grades between 2005 and 2011, the bank estimated. Workers at Teck Resources Ltd.’s Quebrada Blanca copper mine in Chile will vote today to strike as they reject a final company wage offer, union official Jorge Flores said by telephone.
The LME Index of the six main industrial metals traded on the U.K. exchange has gained 12 percent this year. The rally is “not sustainable,” according to JPMorgan Chase & Co.
“The global economy lacks the demand ‘spark’ needed to generate significant upside to industrial-metals prices in the near to medium term,” London-based analyst Michael J. Jansen said in a report dated yesterday.
Tin for three-month delivery on the LME rose 1 percent to $24,212 a ton. The metal is up 26 percent in January and is the month’s best performer among 80 commodities, Bloomberg data show.
Nickel, aluminum, zinc and lead gained in London.
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
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