Copper Surge Pushes Freeport-McMoRan Toward Best Month on Record

  • Lead and copper gain the most as PBOC signals room to act
  • Freeport-McMoRan shares rally more than 60% in February

People's Bank of China Tweaks Monetary Stance

Copper futures rose to a three-month high and Freeport-McMoRan Inc. headed for the biggest-ever monthly increase as concerns eased on economic growth prospects in China and the U.S., the world’s top consumers of the metal.

The economy in China, the biggest copper user, remains strong and its structure and quality are improving, People’s Bank of China Governor Zhou Xiaochuan said in a speech in Shanghai on Friday. A report the same day showed U.S. consumer purchases climbed in January by the most in eight months, indicating the biggest part of the American economy gained momentum at the start of 2016. Copper, which has posted three straight annual losses, posted a second straight weekly advance.

“Some of that bearish sentiment is pulling back a little bit,” Tim Evans, the chief market strategist at Long Leaf Trading Group Inc. in Chicago, said in a telephone interview. “This could be potentially the start of bullish price action if we get other numbers to support growth here in the near to immediate term.”

Copper futures for May delivery advanced 2.5 percent to settle at $2.125 a pound on the Comex in New York, after touching $2.164, the highest since mid-November. On the London metal Exchange, aluminum, copper, lead, nickel tin and zinc rose.

"China overnight has given the market a sense of ease," RBC Capital Markets Ltd. said in an e-mailed note. "LME is stronger this morning across the board on the back of China comments regarding further easing of monetary policy."

Phoenix-based Freeport, the largest publicly traded copper producer, climbed as much as 9.6 percent. The metal miner has risen more than 60 percent this month, the biggest such gain in records starting in 1995.

"The copper price outlook is no longer a simple bearish story," Peter Hollands, the managing director of London-based Bloomsbury Minerals Economics Ltd., said by e-mail. "The macro drivers of price have switched from bearish to either neutral or feebly bullish."

  • One of the world’s most oversupplied metals, aluminum, is displaying the signs of shortage on the LME. The premium for metal for immediate delivery to the benchmark three-month contract, a spread known as backwardation, widened to most in 10 months amid falling inventories and one dominant holder of the material.
  • Immediate-delivery aluminum traded at a premium of $17 a metric ton to the three-month contract, after settling Thursday at a $17.75-a-ton premium. One party held 50 percent to 79 percent of available stockpiles and short-dated contracts on the LME as of Feb. 24, and stockpiles tracked by the exchange are near the lowest level since 2009.
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