Copper Copper Copper !!
Copper Surges to 10-Month High as Fed Brightens Demand Outlook
By Anna Stablum and Halia Pavliva
Aug. 13 (Bloomberg) -- Copper rose to the highest price in 10 months on speculation that demand will revive after the Federal Reserve suggested the U.S. recession is easing and second-quarter growth was reported in Germany and France.
With the U.S. economy leveling out, the Fed said yesterday interest rates will remain near a record low for an extended period. In Germany and France, two of Europes largest economies, government statistics showed the gross domestic product of both rose 0.3 percent from the first quarter. Economists in Bloomberg News surveys forecast contractions.
There is renewed optimism after the Fed meeting, Eliane Tanner, a Credit Suisse Group AG analyst, said by telephone from Zurich. In the longer term, demand should pick up due to increased industrial production.
Copper for September delivery gained 9.05 cents, or 3.2 percent, to $2.914 a pound on the New York Mercantile Exchanges Comex unit. Earlier, the metal reached $2.93, the highest price for a most-active contract since Oct. 1.
It is hard to say where the current rally could conceivably stall, Edward Meir, an MF Global Ltd. analyst in Darien, Connecticut, said today in a note. He said the rally could run through tomorrow before a correction sets in.
Copper for delivery in three months rose $191, or 3.1 percent, to $6,381 a metric ton on the London Metal Exchange.
Among other base metals traded in London, nickel surged as much as 8.5 percent to the highest in almost a year in London, and zinc advanced to its highest since July 2008. Xstrata Plc and other mining companies posted eight of the 10 biggest gains in the U.K. benchmark FTSE 100 Index of shares.
In base metals, the rally resumes, Barclays Capital analysts including Gayle Berry said in a report. The analysts credited the Feds statement yesterday with driving up prices.
London-traded copper has jumped 12 percent this month, heading for an eighth straight advance, and has more than doubled this year. Price gains for industrial metals sped up in recent weeks, lifting the LME Index of the six metals traded on the exchange by 15 percent in July, this years largest gain.
The rally has been a bit too sharp for base metals, Credit Suisses Tanner said. She said prices including copper will decline in the next one to two months.
Before buyers step back in, copper could reach the mid- $5,000 level in London, Tanner said.
New York copper futures will average $2.75 a pound ($6,063 a ton) next year, ING Groep NV said yesterday in a report, 28 percent higher than forecast earlier.
Among other LME metals, aluminum, lead and tin all climbed.
To contact the reporters on this story: Anna Stablum in London at email@example.com; Halia Pavliva in New York at firstname.lastname@example.org
Last Updated: August 13, 2009 14:01 EDT