Copper Climbs as Chinese Manufacturing Index Rises: LME Preview
Copper led gains in industrial metals after a manufacturing index in China increased in August from an 11-month low, adding to signs the world’s second-biggest economy is stabilizing.
-- Copper rose 1.1% to $7,320.50 a metric ton on the London Metal Exchange. Relative strength index 61. -- Aluminum gained 0.6% to $1,907.50 a ton. RSI 61. -- Nickel climbed 0.7% to $14,520 a ton. RSI 54. -- Lead added 0.7% to $2,228 a ton. RSI 65. -- Tin was up 0.5% at $21,850 a ton. RSI 63. -- Zinc advanced 0.2% to $1,971.75 a ton. RSI 64. Other markets: Last % Change % YTD Bloomberg Dollar Index 1,028.99 +0.22 +4.31 Crude Oil $103.72 -0.13 +12.96 Gold $1,361.53 -0.38 -18.73 MSCI World Index 366.22 -0.34 +7.79 Economic Events: Survey Prior Time (London) Euro-zone PMI Manufacturing Aug 50.7 50.3 9:00 Euro-zone PMI Services Aug 50.2 49.8 9:00 U.S. Initial Jobless Claims Aug 17 330K 320K 13:30 U.S. Continuing Claims Aug 10 2963K 2969K 13:30 U.S. House Price Index MoM Jun 0.6% 0.7% 14:00
August 21, 2013, 8:20 p.m. ET
Copper Displays Strength
Higher Prices Follow Optimism About Demand and Economic Growth Overseas
The downtrodden copper market is showing signs of a turnaround amid a brightening economic outlook for the world’s two biggest consumers of the metal, China and Europe.
A flurry of relatively strong readings from the manufacturing and industrial sectors in both places has prompted many investors and analysts to revise global-consumption estimates for copper upward in recent weeks.
Prices of copper are up 9% since July 30. Above, copper cathode sheets in electrolytic tanks in Serbia.
The optimism about demand for copper, which is used in everything from smartphones to refrigerators to cars, has driven prices in the $100 billion futures market up 9% since July 30. Although prices have wavered in recent days amid nervousness about the Federal Reserve’s next policy moves, copper’s recent strength stands in contrast to its performance in the first half of the year, when prices sank 16%.
On Wednesday, copper futures for August delivery fell 0.8%, or 2.8 cents, to $3.3115 a pound on the Comex division of the New York Mercantile Exchange. Prices remain near two-month highs reached on Friday.
Hedge funds and other money managers as a group turned bullish on copper last week for the first time since February, according to the Commodity Futures Trading Commission. They had 7,041 more bets on copper prices rising than wagers on prices falling as of Aug. 13. In early April, investors were betting 38,951 contracts—a record high since at least 2006—in the opposite direction.
“Investors have turned more positive on growth—it’s as simple as that," says Clive Burstow, portfolio manager of Baring Asset Management’s $11.3 million Global Mining Fund. Mr. Burstow recently has boosted his exposure to copper by buying shares of copper-mining companies.
A surprise expansion in manufacturing activity in July in China, the world’s biggest copper consumer and importer, gave the rally its jump-start. The market maintained momentum as the latest Chinese trade and industrial-production data beat expectations and as the euro zone last week reported its first quarterly gain in gross domestic product since 2011.
China’s manufacturing report was a “huge turning point for copper," says Jason Rotman, president of Lido Isle Advisors, a commodities investment-management firm in Newport Beach, Calif. Mr. Rotman said the firm began placing bets on higher copper prices shortly after the manufacturing data was released.
To be sure, some say an onslaught of copper production from new mines—a factor in the selloff in the first half of the year—could continue to cause headwinds for prices. Global mine output in the second quarter was up 8.4% from the same period in 2012, Citigroup analysts said in a note, the fifth straight quarter in which production beat year-earlier levels.
And there is potential for the next ream of Chinese economic data to disappoint. A preliminary reading on the country’s manufacturing activity in August is slated for release on Thursday.
Analysts with Credit Suisse said in a note on Tuesday that copper supply will likely exceed demand in the months ahead, citing the chance that this summer’s gains in demand from Chinese auto makers and home builders will prove fleeting.
“Reading too much into one month’s data can be misleading," the analysts wrote.
Still, bullish investors point out that, not only are copper-demand forecasts being raised, but supplies already are tightening.
Copper stockpiles held in warehouses certified by the London Metal Exchange have declined 16% since late June, a sign of increased demand from manufacturers.
Rising investment in copper-heavy projects such as providing electricity to rural areas and railway expansion mean China’s refined copper consumption is set to rise 9.1% this year, analysts at Morgan Stanley estimate, up from 5% growth in 2012. They expect copper supply to exceed demand by just 53,300 metric tons this year, down from projections for a 124,400 ton surplus at the start of the year.
“Copper’s resilience suggests that the worst is behind us," says Sameer Samana, a senior international strategist with Wells Fargo Advisors, which manages about $1.3 trillion in assets. “If China was really in as bad of a shape as people have been saying, you would have seen a much bigger pullback" in copper and other industrial metals.
@ 2013-06-15 18:00:48
世界最大的上市廢銅商行Sims Metal Management亞洲主席Michael Lion表示，一些存在廣泛交易的高品位廢銅對倫銅價格的折讓，已經跌至了數年來的最低水平。