Copper advanced in London on speculation mining disruptions will erode oversupply.
Stockpiles in warehouses monitored by the London Metal Exchange fell 0.3 percent in today’s warehouse report by the exchange, and last week had the smallest weekly increase in two months. Copper has dropped 11 percent this year as increased production led to the biggest since 2003. The International Copper Study Group, a government-industry group, last week said copper will have oversupply of 417,000 metric tons this year.
“I wouldn’t be surprised if the market in several months is disputing whether the oversupply will be achieved at all,” said Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt. “Oversupply is pretty much priced in.”
Copper for delivery in three months rose 1.4 percent to $7,125 a ton by 12:19 p.m. on the LME. Futures for delivery in July climbed 1.3 percent to $3.227 a pound on the Comex in New York.
Pan Pacific Copper Co., Japan’s biggest producer of the metal, cut its forecast for excess global supply this year to 13,000 tons from 199,000 tons in January, citing output reductions by smelters in India and the U.S.
Nickel advanced 0.7 percent to $15,315 a ton. As much as 40 percent of the global nickel industry may be losing money, Macquarie Group Ltd. said in a report dated today, citing a research company’s estimate. Nickel prices have dropped 11 percent this year.
“Closures will take a little longer to be implemented than some suspect,” Colin Hamilton, an analyst at the bank, said in the report, citing costs from workforce losses, market share and environmental clean-up.
U.S. economic growth probably weakened in the second quarter, to 1.2 percent annualized, Macquarie said. The LME index of six industrial metals dropped 2.3 percent on April 26 after U.S. gross domestic product grew 2.5 percent for the first quarter, while 3 percent was the median forecast of economist estimates compiled by Bloomberg.
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