Copper Rises as China Factory Gauge Adds to World Demand Outlook

May 22, 2014 1:54 pm ET

May 22 (Bloomberg) -- Copper rose for the first time in three sessions on speculation that demand will climb after gauges of manufacturing advanced more than estimated in China and the U.S., the world’s largest consumers of the metal.

The factory measure in China showed a preliminary May reading of 49.7, HSBC Holdings Plc and Markit Economics said today, compared with 48.3 projected in a Bloomberg survey of economists. In the U.S., a Markit manufacturing index increased to 56.2, topping estimates. Sales of previously owned American homes rose in April for the first time in four months, the National Association of Realtors said.

“Better housing-market and manufacturing data signal improving demand,” Tom Power, a senior market strategist at RJO Futures in Chicago, said in a telephone interview today.

Copper futures for delivery in July gained 0.6 percent to settle at $3.142 a pound at 1:08 p.m. on the Comex in New York. The metal fell 1.4 percent in the prior two sessions.

On the London Metal Exchange, copper for delivery in three months rose 0.6 percent to $6,875 a metric ton ($3.12 a pound).

LME stockpiles fell for a 22nd day to 177,350 tons, the lowest since September 2008. Inventories are down 52 percent this year.

Copper for immediate delivery on the LME traded at a $80 premium to the three-month contract, compared with $54 yesterday. The gap may widen as far as $150 over the coming month because of the drop in stocks, Goldman Sachs Group Inc. said in a report today.

Nickel for delivery in three months climbed 1 percent to $19,700 a ton in London. Prices are up 42 percent this year, the most among the main six metals traded on the LME, after leading global miner Indonesia barred raw-ore exports in January.

Aluminum for delivery in three months rose 1.6 percent to $1,796 a ton in London. Prices will average $2,010 next year, Bank of America Merrill Lynch said in a report. Tin, zinc and lead also advanced.