Copper Surges to Record for 7th Day as Demand to Exceed Output
April 13 (Bloomberg) -- Copper prices surged to a record for the seventh straight session in London on signs that demand for the metal used in wiring and plumbing will outpace production.
World copper use will rise 5.4 percent this year to 17.9 million metric tons, exceeding output by 10,000 tons, Goldman Sachs Group Inc. said in a report yesterday. Demand rose 1.7 percent last year, the bank said. The metal will average $5,587 a metric ton in 2006, up 16 percent from a previous forecast, Goldman said. Prices have gained 37 percent this year after climbing 40 percent in 2005.
``We have enormous demand from customers this year, which is much higher than expected,'' said Peter Schubert, marketing manager of Germany's MKM GmbH, Europe's fifth-largest copper fabricator. ``Our stocks are very low.''
Copper for delivery in three months climbed $7 to $6,110 a metric ton at 2:24 p.m. on the London Metal Exchange after reaching $6,135, the highest ever. Prices have climbed 6.7 percent this week, the biggest such gain since late January.
On the Comex division of the New York Mercantile Exchange, copper for May delivery gained 1.85 cents, or 0.7 percent, to $2.79 a pound after reaching a record $2.803. A futures contract is an obligation to buy or sell a commodity at a fixed price for a specific delivery date.
Prices have been buoyed by a decline in global inventories and strikes at mines. A 20-day strike at La Caridad, Mexico's second- largest copper mine, may force Grupo Mexico SA to suspend May deliveries to clients, the Mexico City-based company said yesterday. The mine produces 250,000 tons of copper annually.
LME Inventories
Copper stockpiles in warehouses monitored by the LME dropped 100 tons to 111,650 tons today. That's equal to less than three days of global consumption. Inventories have dropped 8.4 percent this month.
As much as 11,775 tons of LME copper stockpiles are under ``canceled warrants,'' which means the metal has been bought and will move from warehouses, according to LME data.
Copper has also benefited as hedge funds and other investors seek investments that have delivered greater returns than stocks and bonds. The Standard & Poor's 500 Index has gained 3.2 percent this year. Benchmark U.S. Treasuries have lost about 1.5 percent, according to Merrill Lynch & Co. indexes.
``There's so much money in the market coming from the investment community,'' said Bo Samuelsson, president of Sweden's Elektrokoppar AB, a copper-wire producer. ``The market is no longer reflecting consumers and producers.''
Zinc fell $10, or 0.3 percent, to $2,995 a ton. The metal earlier reached a record $3,040.
Stockpiles monitored by the LME rose 8,600 tons, or 3.3 percent, to 273,225 tons, the largest gain since June 2005.
To contact the reporter on this story:
Chanyaporn Chanjaroen in London at cchanjroen@bloomberg.net
Last Updated: April 13, 2006 09:31 EDT
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