Copper soars to record high
By Javier Blas in Geneva
Published: February 1 2011 23:08 | Last updated: February 1 2011 23:08
Copper prices rose to within striking distance of the $10,000-a-tonne psychological level after leading miners reported lower-than-expected production levels for the metal and traders bet that strong economic growth would push up demand.
Copper for delivery in three months at the London Metal Exchange rose to a record high of $9,955 a tonne on Tuesday, up from the previous day’s close of $9,745. “For now, the debate is all about when, and not if, we’ll see the ‘magic’ $10,000 number,” said Alex Heath, of Royal Bank of Canada in London. In spite of record prices, Michael Widmer, metals analyst at Bank of America Merrill Lynch in London, said copper was “a buy” and forecast an average price this year of $11,250 a tonne.
“Underlying fundamentals on the copper market remain healthy,” he added.
The red metal’s sensitivity to the strength of the global economy has earned it the nickname Dr Copper. Its rise to within striking distance of the $10,000 mark is seen by many as evidence that fears of a double-dip recession are overdone.
The red metal is benefiting from strong demand globally but the main driver continues to be disappointing supply, with forecasts of a growing shortage this year and in 2012 suggesting a further drawdown of inventories.
The collective output of the top four listed copper miners – Freeport-McMoRan, BHP Billiton, Xstrata and Rio Tinto – dropped 12 per cent in the first half of 2010 from a year earlier. The preliminary data for the second half of the year have also disappointed as companies struggle with older and more costly mines.
China could derail the rally, however.
Physical traders said that Chinese companies were not buying at current prices and were maintaining that they would not return to the market for some time.
China is the world’s largest importer of copper and the swings in trading of the metal have a large impact on prices in the two top copper markets, Shanghai and London.
However, copper bulls point to the strength of consumption now in the US and, to a lesser extent, in Europe. “Although China has, during the past few years, been the main copper demand driver, it is worth noting that the world excluding China still accounts for roughly 60 per cent of total consumption,” said Mr Widmer.
Copyright The Financial Times Limited 2011. You may share using our article tools. Please don't cut articles from FT.com and redistribute by email or post to the web.
News 
Market Data 
Discover 
AI
