Copper Heads for Second Monthly Gain on Signs of Limited Supply

May 30, 2014 8:47 am ET

May 30 (Bloomberg) -- Copper rose in New York, heading for a second monthly advance, amid indications that supply of the metal is constrained.

Stockpiles of copper tracked by the London Metal Exchange plunged the most since 2005 in May, and the monthly drop was the 11th in a row, data from the bourse showed today. Copper for immediate delivery traded this week at the highest premium since May 2012 to the LME’s three-month contract. Climbing prices for earlier deliveries usually indicate limited supplies.

“The rapid widening of cash to threes reflected decent spot demand,” said Andrey Kryuchenkov, an analyst at VTB Capital in London. “Revived short-term physical demand lately helped prices to the upside also, given dwindling stockpiles.”

Copper for delivery in July added 0.4 percent to $3.156 a pound by 8:29 a.m. on the Comex in New York. Prices increased 4.2 percent in May. The metal for delivery in three months rose 0.2 percent to $6,900 a metric ton on the LME.

Inventories of copper tracked by leading exchanges slid 45 percent this year to the lowest since 2008, according to data compiled by Bloomberg. Cash copper reached a $101-a-ton premium to three-month metal in London on May 28 and was at $85 today.

Financial markets in China, the world’s biggest copper consumer, will be shut June 2 for the Dragon Boat Day holiday. The nation’s statistics bureau and logistics federation will release an official manufacturing gauge for May on June 1.

Nickel for delivery in three months rose 2.1 percent to $19,295 a ton in London. Prices climbed 5.3 percent this month, headed for a sixth straight gain, the longest winning streak since 2003. The metal is this year’s best performer on the LME, up 39 percent.

Aluminum rose in London as lead fell. Zinc and tin were little changed.

--With assistance from Alex Davis in Hong Kong and Jae Hur in Tokyo.