Copper Rises, Heads for Longest Rally in a Year, on Equity Gain
By Millie Munshi
April 17 (Bloomberg) -- Copper rose, capping a fifth straight weekly gain and the longest rally in a year, as a rebound in equity markets revived prospects for economic growth and metal demand.
The Standard & Poor’s 500 Index rose as much as 1 percent, erasing an earlier decline. The gauge has climbed for three straight days and is up 1.7 percent this week. Copper is up 6.1 percent since April 9, the fifth straight week and the longest weekly rally since April last year, when the price was headed to a record.
Metals will continue to be driven by “the trend in U.S. equity markets,” which are an indicator of economic growth, Edward Meir, an analyst at MF Global Ltd. in Darien, Connecticut, said in a report.
Copper futures for July delivery rose 1.85 cents, or 0.8 percent, to $2.1975 a pound on the New York Mercantile Exchange’s Comex division.
The metal will continue to increase as Chinese demand remains firm, said Michael Gross, a trader at OptionSellers.com in Tampa.
China has pledged 4 trillion yuan ($585 billion) in spending to prop up the economy and is considering additional stimulus measures. The country will continue to buy copper as part of its stockpiling program, Gross said.
“The market seems to be fairly jubilant over the expectations for China,” Gross said. “I wouldn’t be surprised to see the uptrend continue in the longer term.”
Earlier, the metal lost as much as 1.9 percent on signs that the global economy remains sluggish, damping speculation that the worst of the recession was over.
‘Exceeded Expectations’
The copper price has jumped 56 percent in 2009 and this week touched $2.2415, the highest price for a most-active contract since Oct. 20.
“Copper has significantly exceeded expectations,” UBS AG analysts led by Daniel Brebner in London said yesterday in a report e-mailed today. “We believe that prices have likely overshot fair value given the extent to which global demand deteriorated.”
The metal will average $1.65 a pound this year, UBS forecasts. That’s 25 percent below today’s closing price.
On the London Metal Exchange, copper for delivery in three months gained $76, or 1.6 percent, to $4,805 a ton ($2.18 a pound). The price reached a record $8,940 on July 2.
To contact the reporter on this story: Millie Munshi in New York at mmunshi@bloomberg.net.
Last Updated: April 17, 2009 14:13 EDT
