Aluminum Heads for Longest Gain in at Least 22 Years on Demand
By Anna Stablum
July 28 (Bloomberg) -- Aluminum rose for an 11th day, the longest advance in at least 22 years, on signs demand from manufacturers is recovering. Copper gained in London and New York to near the highest in nine months.
Aluminum has jumped 18 percent since July 13 on speculation automobile manufacturers will need more of the metal. Japan’s shipments of aluminum rolled products fell at the slowest pace in seven months in June as demand from can and automakers rose, the Japan Aluminium Association said in a statement today.
“Consumers have been buying aluminum,” said Alex Heath, head of industrial metals trading at RBC Capital Markets in London. Buyers include can and car producers, he said.
London Metal Exchange aluminum for delivery in three months rose $17, or 0.9 percent, to $1,843 a metric ton by 1:26 p.m. local time. Prices have climbed for the longest run since at least 1987, according to Bloomberg data.
Copper rose 0.3 percent to $5,615.50 a ton, after reaching $5,645, near a more than nine-month high of $5,646 yesterday. Futures for September delivery rose 0.5 percent to $2.5575 a pound on the New York Mercantile Exchange’s Comex division. Nickel climbed $75, or 0.4 percent, to $17,025 a ton after earlier today gaining to $17,200, the highest since Sept. 26.
Copper and nickel producers are holding back some sales in anticipation they can get a higher price for the metals, Heath said. “They all think it is going to go higher,” he said.
The Dollar Index fell for a third day to the lowest since December, making metals denominated in the dollar cheaper for holders of other currencies.
Global Recovery
“A lot of the move in the base metal complex has been exacerbated by the strength and positive indicators of a global recovery,” RBC’s Heath said. “The dollar is undoubtedly driving this rally.”
The LME Index, a gauge of the six industrial metals traded on the bourse, has surged 55 percent this year on speculation the worst of the global recession has passed. World industrial production is set to expand at an annual rate of 7 percent in the second half, Michael Jansen, an analyst at JPMorgan Securities Ltd. in London, wrote in a report e-mailed yesterday.
“Underpinning base metal demand in the second half will be the onset of restocking across the industry pipeline,” he said. Fabricators had “run down their working inventory levels aggressively over the past 12 months,” he said.
Favored Metal
Copper is forecast to average $5,450 a ton in the second half, Jansen said. “Copper remains our favored base metals exposure over the longer term,” with supply falling short of demand in 2011 and after, he said. The average was $4,707.80 a ton for the three-month contract in the second quarter.
Stockpiles of aluminum fell 4,225 tons, LME data today showed. Near-record inventories of about 4.6 million tons are being overshadowed by speculation some aluminum supplies are not immediately available to the market and instead tied to financing transactions, Heath said. Barclays Capital estimates that almost 2 million tons are tied up.
Aluminum inventories have climbed 3.5 percent this month after rising throughout the past year and gaining as much as 29 percent in December.
Among other LME metals for three-month delivery, zinc rose 0.9 percent to $1,725 a ton, and lead was unchanged at $1,797.75 a ton. LME stockpiles of zinc rose to the highest since February 2006, up 2.2 percent to 368,475 tons, and lead inventories leapt 3 percent to 98,550 tons, the highest in more than a year.
Tin eased 0.3 percent to $14,550 a ton.
To contact the reporter on this story: Anna Stablum in London at astablum@bloomberg.net.
Last Updated: July 28, 2009 08:52 EDT
