Copper Rises on Tighter Supply, Outlook for Stronger U.S. Demand

Apr 24, 2014 1:53 pm ET

April 24 (Bloomberg) -- Copper futures rose to a six-week high as stockpiles monitored by global exchanges declined to the lowest since 2009 and the outlook for demand improved in the U.S., the world’s second-largest user of the metal.

Inventories tracked by exchanges in Shanghai, London and New York have dropped 23 percent this year. Broker Comm Trade USA Inc. said a dwindling supply of scrap copper has narrowed the discount to new metal to the tightest in two years. Orders for durable goods in the U.S. climbed last month by the most since November, government data showed today.

“A drop in scrap-copper supply is signaling we’re facing a tighter market, just as we’re seeing increased economic activity,” Tom Power, a senior market strategist at RJO Futures in Chicago, said in a telephone interview.

Copper futures for delivery in July gained 1.6 percent to settle at $3.088 a pound at 1:17 p.m. on the Comex in New York after touching $3.095, the highest since March 7.

On the London Metal Exchange, copper for delivery in three months rose 1.2 percent to $6,753 a metric ton ($3.06 a pound).

Scrap copper No. 1 has traded at a discount of as little as 8 cents a pound below the price of new metal, Bryan Rosenstrauch, president of Comm Trade USA in Houston, said in a telephone interview. The discount was about 10 cents a year earlier, he said.

The refined-copper market had a deficit of 53,000 tons in January, compared with a 17,000 surplus in December, the International Copper Study Group said yesterday. China is the biggest consumer.

Nickel for delivery in three months touched $18,600 a ton in London, the highest since February 2013, before closing lower. Prices have gained 32 percent this year on concern global supplies will be disrupted amid Russian intervention in Ukraine and an ore-export ban in Indonesia. Russia is home to OAO GMK Norilsk Nickel, the biggest producer of refined metal.

Aluminum, zinc and lead advanced on the LME, while tin was unchanged.

--With assistance from Jae Hur in Tokyo and Maria Kolesnikova in London.