Copper Swings Between Gains and Declines Amid Lack of Demand

Feb. 28 (Bloomberg) -- Copper swung between gains and drops in London, set for a second monthly slide in three, as investors weighed better-than-expected U.S. economic figures against a lack of physical demand. Aluminum fell for a ninth session.

U.S. orders for durable goods rose the most in a year in January excluding transportation and pending home sales climbed more than forecast, reports showed yesterday. Global copper usage expanded 1 percent last year, below the 10-year average of 3 percent, according to Macquarie Group Ltd. Copper stockpiles tracked by the London Metal Exchange swelled for a fifth month.

“The U.S. is not a big swing factor in base-metals demand,” Guy Wolf, a macro strategist at Marex Spectron Group in London, said by phone. “It’s much more about China. In base metals, there’s been limited physical demand all year.”

Copper for delivery in three months slipped 0.1 percent to $7,862 a metric ton by 12:54 p.m. on the LME after climbing as much as 0.8 percent. Prices are down 3.7 percent this month. Copper for delivery in May rose 0.2 percent to $3.5725 a pound on the Comex in New York.

“The bargain-hunters are coming back,” Guillaume Osouf, a broker at Triland Metals Ltd. in London, said by phone. “There is a good buying flow, but it’s very cautious, very fragile.”

A report today may show the U.S. economy expanded at a revised 0.5 percent annualized pace in the fourth quarter from an initial 0.1 percent contraction, according to a Bloomberg News survey. Still, the Federal Reserve will keep buying $85 billion of debt a month to stimulate the economy, Chairman Ben S. Bernanke indicated this week.

“Markets are still vulnerable,” Marex Spectron’s Wolf said. “The U.S. is fine relative to the rest of the world, but that is probably going to mean we’re going to see the dollar strengthen, which tends to be negative for base metals.”

LME copper inventories gained 0.5 percent to 446,700 tons, daily exchange figures showed, capping a 20 percent expansion in February. Stocks have doubled since the end of September.

Aluminum touched $1,993.85 a ton, the lowest price since Nov. 28 and below the 200-day moving average at about $2,001. Nickel and lead fell as tin rose, while zinc was unchanged.

--Editors: Dan Weeks, Claudia Carpenter.