Copper climbed for a fifth day, and headed for its longest rally since July, on concern supplies may lag behind demand as inventories shrink and on expectation the Federal Reserve may take more steps to boost economic growth.
Copper for three-month delivery on the London Metal Exchange rose as much as 0.8 percent to $8,790.50 a metric ton, the highest price since Nov. 12, and traded at $8,762.25 at 2:59 p.m. in Singapore. Aluminum, zinc and nickel advanced.
The prospect of an exchange-traded fund is also boosting investor confidence, said Wang Yangyi, an analyst at Nanhua Futures Co. JPMorgan Chase & Co., which will introduce a U.S. exchange-traded fund for physical copper, has acquired more than half of the inventory tracked by the LME, the Daily Telegraph reported, citing a source close to the situation.
“There are several reasons to push prices higher, including falling stockpiles and the possibility of further easing by the Federal Reserve,” Nanhua’s Wang said from Zhejiang. Commodities are benefitting from investors seeking alternative investments to declining currencies, Wang said.
The metal for March-delivery on the Shanghai Futures Exchange traded little changed after climbing as much as 0.4 percent to 66,050 yuan ($9,936) earlier. Comex futures in New York advanced as much as 0.8 percent to $4.029 a pound, the highest level since Nov. 12.
Copper stockpiles in LME warehouses have shrunk 30 percent this year, dropping to 353,625 tons, near the lowest level since October 2009, exchange data show. Inventories monitored by the Shanghai Futures Exchange fell last week for a second week.
One unidentified company held between 50 percent and 79 percent of LME copper stockpiles from Nov. 22 through to Dec. 1, the latest exchange data show. JPMorgan holds the inventory, the Daily Telegraph reported. A call to JPMorgan’s media relations office in New York outside of office hours wasn’t answered.
J.P. Morgan Physical Copper Trust will hold only so-called grade-A copper and not futures, the bank said in an Oct. 22 filing to the Securities and Exchange Commission.
One firm held between 50 percent and 79 percent of LME-monitored deliverable copper stockpiles on certain dates in July and November last year. In 2008, one company held most of the inventories, at times exceeding 90 percent, for several months.
Buyers on Dec. 1 paid $74 a ton, the largest premium in two years, for immediate supply, relative to the three-month contract. That gap narrowed to $42 a ton on Dec. 3.
Under LME rules, a firm holding 50 percent to 79 percent of the deliverable stockpiles has to lend the metal to buyers at no more than 0.5 percent of the cash price for a day.
Federal Reserve Chairman Ben S. Bernanke said U.S. unemployment may take five years to fall to a normal level and Fed purchases of Treasury securities are possible beyond the $600 billion announced last month. The unemployment rate rose to a seven-month high of 9.8 percent in November as payroll growth slowed to 39,000 from 172,000, the Labor Department said.
In Chile, wage talks at Anglo American Plc and Xstrata Plc’s Collahuasi venture will continue today as union and company representatives failed to reach a wage agreement in a seventh day of talks.
Workers at the world’s third-biggest copper mine have been on strike for a month, the longest recorded dispute at a major Chilean copper mine, surpassing the 26-day strike at BHP Billiton Ltd.’s Escondida in 2006.
Aluminum in London rose 1.2 percent to $2,345.75 a ton, zinc gained 1.3 percent to $2,248 a ton and lead climbed 1.3 percent to $2,370.50 a ton. Nickel advanced 1.1 percent to $23,750 a ton, while tin increased 0.6 percent to $25,700 a ton.