Copper in New York climbed to a record amid declining stockpiles in China, the largest user, and after positive U.S. economic data spurred expectations the global economic recovery will continue.
Metal for March delivery on the Comex in New York gained as much as 0.9 percent to $4.2985 a pound, the highest ever, and traded at $4.2755 by 11:10 a.m. London time. The London Metal Exchange is closed today and tomorrow for public holidays.
“As global supply is expected to fall short of demand, and China’s proactive fiscal policy means demand from big infrastructure projects will remain, the fundamental picture is really positive for copper right now,” Wu Jianjian, an analyst at Yong’an Futures Co., said by phone from Hangzhou.
Copper stockpiles monitored by the Shanghai Futures Exchange fell 5.8 percent last week, declining for the fourth week out of five, according to data provided by the bourse. Inventories dropped to 120,426 tons, based on a survey of seven warehouses in Shanghai, the exchange said.
The global copper market is estimated to have a 550,000 ton deficit next year as falling stockpiles push prices to $5 a pound, Macquarie Bank Ltd. said in a research report today. The forecast was based on an assumption of 4 percent mine supply disruption, or 720,000 tons, with global stocks falling to less than three weeks of world consumption, according to the report.
Confidence among American consumers probably improved this month, economists said before the Conference Board’s report due to be released on Dec. 28. U.S. stocks gained for a fourth week last week after data showed the economy grew more in the third quarter than initially reported and Americans increased spending in November for a fifth month.
The Dollar Index, which tracks the greenback against the currencies of six major U.S. trading partners including the euro, yen and pound, declined 0.3 percent to 80.254. A weaker dollar is supportive of metal prices as it makes the materials priced in the U.S. currency cheaper for buyers using other monies.
The People’s Bank of China yesterday raised interest rates for the second time since mid-October to counter rising inflation rates. The benchmark one-year lending rate increased by 25 basis points to 5.81 percent and the one-year deposit rate climbed by the same amount to 2.75 percent.
“Market participants expected an interest rate rise, so this isn’t really negative to the market,” said Cao Yanghui, an analyst at Nanhua Futures Co. “As there probably won’t be any further tightening measures in the next couple of weeks, a little buying drove the price to a record amid thin volume.”