Copper Prices Rise On Lower Surplus

Michael Teague |

Copper futures gained for a second consecutive day heading into the final hours of the week of trading, the result of smaller inventories and underwhelming domestic economic data that allayed fears about next month’s anticipated reduction of federal stimulus spending.

The London Metal Exchange (LME) saw stockpiles 3.4 percent lower for the week, the biggest drop in inventory in almost a year, as futures due for delivery in December were up 0.4 percent to $3.35 per pound on the New York Comex, while the LME saw almost identical results on a gain of 0.2 percent. Inventories were lower for the 28th consecutive trading session to 564,225 tons.

Stronger prices for the metal could be offset by modest reductions in the pace of Chinese growth, as the world’s largest consumer of copper tightens liquidity in an attempt to head risks in financial markets.

Friday’s weaker home sales figures also figured in to copper’s gains on the day, as investors interpreted the data as the sort of variable that would convince the Fed to postpone the beginning of the gradual curtailment of its $85 billion a month in asset purchases.

The future of copper prices will also be to some extent dependent on sustained demand in China, but also throughout the developing world. Large mining companies like BHP Billiton (BHP) , Vale SA (VALE) , and Rio Tinto (RIO) have posted record numbers for iron ore production, but have received less attention for greatly increased copper output through the first half of 2013. This week’s significant drop in stockpiles suggests that demand will remain unchanged for the near-term.

[Image: Copper, courtesy of Wikimedia Commons]

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Companies

Symbol Name Price Change % Volume
BHP BHP Billiton Ltd. ADR (Sponsored) 27.93 0.27 0.98 3,694,478
RIO Rio Tinto Plc (United Kingdom) ADR (Sponsored) 30.90 0.40 1.31 4,238,093
VALE Vale S. A. ADR 4.78 0.15 3.24 39,798,063

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