Copper Surges to Fresh Highs
Source: Dow Jones, Matt Whittaker (2/1/11)
"Experts forecast a shortfall of 400K–800K metric tons this year."
Copper for February delivery jumped 2% to settle at $4.54 a pound, beating out the last record high from Jan. 3 on the Comex.
The already optimistic outlook for world copper demand was further bolstered by several indicators. U.S. manufacturing activity in January rose to its highest level since May 2004, Chinese purchasing managers' indexes registered growth and eurozone manufacturing jumped to a nine-month high. On Monday, data was released showing manufacturing activity in the U.S. Midwest hit a 22-year high in January.
Copper traded on the London Metal Exchange also closed at a record $9,945/ton, roughly equivalent with New York prices, and later traded even higher.
"Manufacturing is hot everywhere," said FuturePath Broker and Analyst Trading Frank Lesh.
This gives a bullish tint to the red metal because copper is widely used to make wires, pipes and sheets for appliances, automobiles, electronics and buildings.
The data out of China was particularly supportive because the Asian nation is the world's biggest copper consumer thanks to its rapid urbanization and industrialization.
In addition, the price difference between copper traded on LME and that on the Shanghai Futures Exchange continues to narrow because Shanghai copper prices are rising at a faster rate than prices elsewhere—a sign that China's buyers are willing to pay even more.
Shanghai copper ended 2% higher at only a $143 discount to the London price.
Copper purchases were strong in Asia ahead of the weeklong Lunar New Year holiday that begins Wednesday.
With Chinese demand adding to a continued recovery in developed economies, experts forecast global demand will exceed supply this year, anticipating a shortfall of 400,000–800,000 metric tons.