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Copper, Zinc Prices Rise to Records in London as Global Inventories Fall
March 27 (Bloomberg) -- Copper and zinc prices rose to records in London on speculation that metals demand, driven by worldwide economic growth, will reduce inventories and trigger supply shortfalls. Gold and silver also climbed.
Global growth will expand this year by more than the 4.3 percent rate the International Monetary Fund projected in September, IMF Managing Director Rodrigo de Rato said March 15. Copper stockpiles tracked by exchanges in London, New York and Shanghai slumped 7.7 percent last week to a seven-week low, data showed. Zinc inventories dropped to the lowest since July 2001.
``People are positive on the demand side of these metals as the global economy grows,'' said Jon Bergtheil, head of global metals strategy at JP Morgan Securities Ltd. in London. ``Falling inventories also help.''
Copper for delivery in three months rose $60, or 1.1 percent, to $5,310 a metric ton ($2.4082 a pound) at 7:05 p.m. on the LME after reaching a record $5,332. Prices have more than tripled in the past three years.
On the Comex division of the New York Mercantile Exchange, copper futures for May delivery rose 3.55 cents, or 1.5 percent, to $2.43 a pound after reaching $2.438, the highest ever. A futures contract is an obligation to buy or sell a commodity at a fixed price for delivery by a specific date.
Zinc for delivery in three months rose $44, or 1.7 percent, to $2,624 a ton on the LME after reaching a record $2,630.30. Before today, prices had surged 93 percent in the past 12 months.
Zinc stockpiles tracked by the LME fell 1,000 tons, or 0.3 percent, to 295,825 tons today. Copper inventories dropped 850 tons, or 0.7 percent, to 123,850 tons.
Gold prices rose the highest in three weeks, and silver extended a rally to a 22-year high as the metal approached $11 an ounce.
Newmont
Newmont Mining Corp. said last week copper production at the Batu Hijau mine in Indonesia will be lower than the company expected this year because of unstable earth conditions.
Copper users, such as pipemakers and power-cable manufacturers, already face a production shortfall this year, some analysts said. The deficit will be 207,000 tons, London-based consulting company Bloomsbury Minerals Economics Ltd. said last month. The metal has been in a shortage since 2002, the company said.
Hedge-fund managers and other large speculators increased their net-long positions, or bets prices will rise, in Comex copper futures to 3,010 contracts in the week ended March 21, U.S. Commodity Futures Trading Commission data showed on March 24. Net- long positions more than tripled from a week ago.
Citigroup Forecast
Citigroup Inc., the largest U.S. bank, raised its 2006 price forecasts for copper, nickel and aluminum because of global economic expansion and supply shortages. Copper will average $1.85 a pound, or $4,079 a ton, 16 percent higher than the bank's previous forecast, John Hill, Citigroup's San Francisco-based analyst, said in a report today.
``Given the current economic and operating environment, it is difficult to see how metals supplies will be meaningfully replenished,'' Hill said.
Citigroup also raised its nickel forecast by 8.3 percent to $6.23 a pound, and aluminum by 1 percent to $1.023 a pound.
Imports of copper and its alloys into China, the world's largest consumer of the metal, plunged 50 percent in February, China's Customs General Administration said today. The drop marked the fifth straight month of declines.
Imports of the metal in the two months ended February dropped 43 percent to 132,308 tons.
High Costs
Chinese traders have been reluctant to import copper because prices for the metal in Shanghai have been below the cost of bringing the metal into the country, analysts including Calyon Global Trading's Maqsood Ahmed said. In addition to the London copper price, Chinese users have to pay a 17 percent value-added tax, 2 percent import tax, premiums and freight charges.
Gold futures for April delivery rose $6.30, or 1.1 percent, to $566.80 an ounce on the Comex after reaching $568.60, the highest since March 6. A close at that price would mark the highest since March 6. Silver for May rose 14.5 cents, or 1.4 percent, to $10.88 an ounce after reaching $10.94.
Aluminum inventory dropped 3.2 percent last month from January, the London-based International Aluminium Institute said today.
Stockpiles declined to 3.16 million metric tons in February from 3.27 million tons in January, the institute said today in a report. Inventory was 3.17 million tons in February 2005.
On the LME, aluminum prices rose $16, or 0.6 percent, to $2,555 a ton. Nickel gained $75, or 0.5 percent, to $15,275. Tin climbed $75, or 0.9 percent, to $8,300. Lead gained $2, or 0.2 percent, to $1,250.