Copper Futures Cap Longest Rally Since May 2012 in New York

Copper futures rose for a sixth straight session, the longest rally since May 2012, as signs of low U.S. inflation eased concern that the Federal Reserve will trim its stimulus measures at a meeting next week.

The producer-price index in the U.S. slid 0.1 percent in November, the third straight monthly decline. The median estimate in a Bloomberg survey of 77 economists called for no change. On Dec. 6, 34 percent of economists surveyed by Bloomberg expected the Fed will start cutting its $85 billion of monthly bond purchases at a meeting next week.

“The negative inflation readings could temporarily temper December tapering fears,” Tom Power, a senior commodities broker at RJO Futures in Chicago, said by telephone. “You could continue to see a rally if the tapering is delayed.”

Copper futures for delivery in March rose 0.5 percent to settle at $3.312 a pound at 1:16 p.m. on the Comex in New York, capping a weekly gain of 2 percent, the biggest for a most-active contract since Sept. 20. On the London Metal Exchange, copper for delivery in three months added 0.4 percent to $7,255 a metric ton ($3.29 a pound).

The copper-cathode market is the tightest since early 2011, JPMorgan Chase & Co. said in a report Dec. 11. Copper for immediate delivery traded as much as $13.50 a ton above the three-month contract today, after yesterday reaching the widest backwardation since 2012. Backwardation, a market structure in which prices for earlier-dated contracts are higher than deferred ones, can signal limited supply.

Stockpiles available for delivery in warehouses monitored by the LME fell to a five-year low. “Nearby physical tightness and a sharp inventory drawdown inflated” the spread, Edward Meier, an analyst at INTL FCStone in New York, wrote in a note today.

Aluminum, tin, nickel, zinc and lead also advanced in London.

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