Copper falls for 5th day...

Discussion in 'Wall St. News' started by S2007S, Jan 18, 2007.

  1. S2007S


    Copper Falls for a Fifth Day in N.Y. as Supply Outpaces Demand

    By Halia Pavliva

    Jan. 18 (Bloomberg) -- Copper prices in New York fell for the fifth straight session as rising supply of the metal outpaces demand, including from the U.S., the world's second- biggest user of the metal.

    Copper supplies from mines and scrap yards exceeded demand by 51,000 metric tons in October, compared with a deficit of 16,000 tons in September, the International Copper Study Group said in a report today. U.S. usage fell 14 percent, partly due to a shortage of cathode, the Lisbon-based group said.

    ``Copper price is in downtrend right now because production is rising globally,'' outpacing demand, said John Gross, director of metals management at Scott Brass Inc. in Cranston, Rhode Island.

    Copper futures for March delivery fell 5.95 cents, or 2.3 percent, to $2.51 a pound at 11 a.m. on the Comex division of the New York Mercantile Exchange. A close at that price, would be the biggest decline since Jan. 5. Prices dropped 3.5 percent in the four previous sessions. On the London Metal Exchange, copper for delivery in three months fell $90 to $5,560 a metric ton as of 4:02 p.m. local time.

    Stockpiles monitored by metal exchanges in London, Shanghai and New York were little changed today, declining 0.3 percent, to 261,739 metric tons. Inventories have gained 58 percent in the past three months and are close to the highest since July 2004. Prices have dropped 37 percent from a record $4.04 a pound on May 11, partly because of a U.S. housing slump.


    The copper market recorded a surplus of 353,000 tons in the first 11 months of 2006, Metals Insider said in an e-mailed report today, citing the World Bureau of Metal Statistics.

    The surplus ``has ballooned over the last couple of reported months'' as it rose by 80,000 tons in November alone, Metals Insider said. ``Assessments of last year's market balance have been bedeviled by the big movement of unreported stocks from the Chinese strategic reserve.''

    Production of the metal, used in pipes and wires, for the first 10 months of 2006 exceeded demand by 128,000 tons, compared with a deficit of 298,000 tons for the same period in 2005, the International Copper Study Group said.

    Copper declined today even after a government report showed housing starts in the U.S. unexpectedly rose in December as sales improved and the weather turned unseasonably warm. Builders account for more than 46 percent of U.S. copper use, with the average U.S. home containing about 400 pounds of the metal, according to data from the Copper Development Association.

    Housing Starts

    Builders broke ground on new homes at an annual rate of 1.642 million last month, up 4.5 percent from November's 1.572 million rate, the Commerce Department said in Washington. Starts were forecast to drop, according to the median estimate of economists surveyed by Bloomberg News. Building permits jumped 5.5 percent, the most in four years, to a 1.596 million pace.

    ``It will not'' help the copper price, Gross said. ``I would attribute this more to mild weather rather than any significant change in the industry.''

    Last month was the warmest December since 1957 and the fourth-warmest since record-keeping began in 1895, according to the National Climatic Data Center in Asheville, North Carolina.

    Even with last month's gain in housing starts, residential construction dropped 13 percent for all of last year, the biggest yearly decline since 1991, to 1.801 million.

    New home sales have improved in recent months as builders lowered prices and offered more incentives, such as plasma televisions and better appliances. The report reinforces other data that suggest the worst of the construction slump is over and housing will gradually be less of a drag on growth.

    The better-than-expected December housing figures are ``slightly positive'' for short-term copper price outlook, said Edward Meir, an analyst at Man Financial Inc. in Darien, Connecticut. ``Over the medium term, rising stocks will make it harder to justify a sustained, upward advance.''