Copper advanced for a fifth day, the longest rally since August, as falling inventories fueled speculation that global supplies will dwindle later this year.
The metal for delivery in three months gained as much as 1 percent to $8,495 per metric ton, the highest level since April 4. The last time prices increased five straight days was August 31. Copper is 0.6 higher this month after a 0.6 percent drop in March. The July-delivery contract today rose 0.9 percent to $3.8585 a pound on the Comex in New York. Markets in China are closed for a holiday today.
“The declines in copper stockpiles, both in London and Shanghai, are the key reasons behind the price rally,” Lelia Kim, a metals trader at Tong Yang Securities Inc., said today by phone. “People now seem to be paying attention again to a tight supply situation expected later this year.”
Stockpiles of copper monitored by the London Metal Exchange have dropped to the lowest since November 2008 and those tracked by Shanghai’s exchange are the smallest in more than two months, data from the bourses showed last week.
Copper demand will increasingly exceed supply in the second half of the year, Macquarie Group Ltd. said in a report last week. “We reiterate our view that both the refined copper and copper concentrate markets will be in increasing deficit moving into the second half,” it said.
The metal in London gained 2.7 percent last week, the second straight weekly advance, buoyed by a report that showed the biggest gain in U.S. consumer spending in more than a year. Hiring in the U.S. probably picked up in April after the weakest gain in five months, and the jobless rate stayed at 8.2 percent, showing improvement in the labor market, economists said before reports this week.
Hedge-fund managers and other large speculators increased their net-long position in New York copper futures by 1,065 contracts, or 85 percent, in the week ended April 24 from the previous week, according to U.S. Commodity Futures Trading Commission data.
On the LME, nickel for delivery in three months gained 1 percent to $18,279 a ton, zinc rose 0.5 percent to $2,051 a ton and lead was 0.3 percent higher at $2,146.50 a ton. Aluminum advanced 0.3 percent to $2,114 a ton and tin rose 0.9 percent to $22,700 per ton, respectively.