Copper Gains Most in Two Weeks as Global Demand May Top Supply...

Copper Gains Most in Two Weeks as Global Demand May Top Supply

By Millie Munshi

Oct. 26 (Bloomberg) -- Copper jumped the most in two weeks on speculation that global economic expansion will boost demand for the metal used in homes, cars and appliances.

China's economy, the biggest contributor to global growth, expanded 11.5 percent in the third quarter. Copper imports by the country, the world's biggest metals user, almost doubled in the nine months ended Sept. 30. Copper, which generally moves in tandem with the economy, is up 23 percent this year.

``Global demand is really going through the roof,'' said Michael Smith, president of T&K Futures & Options in Port Saint Lucie, Florida. ``We're really just going to see copper prices go higher and higher.''

Copper futures for December delivery gained 5.15 cents, or 1.5 percent, to $3.5375 a pound on the Comex division of the New York Mercantile Exchange. That's the biggest gain since Oct. 10. The metal still fell 0.4 percent this week, the third straight weekly decline, partly on concern U.S. growth may slow.

Chinese imports of copper and its alloys jumped 93 percent to 1.2 million metric tons in the nine months ended Sept. 30 from a year earlier, the Beijing-based customs offices said yesterday.

Strong Chinese Demand

``Underlying demand for copper in China remains very strong,'' said Patricia Mohr, an analyst at Scotiabank Group in Toronto.

Increases in China's consumption of the metal will be more important than any lost demand in the U.S., the world's second- biggest metals consumer, Mohr said. Copper has fallen 12 percent since reaching a record high of $4.04 a pound in May 2006 as a housing slump reduced U.S. usage.

``The copper consumption in China is much larger than U.S. consumption and is a bigger factor for demand,'' Mohr said. ``China is the number-one factor in copper demand.''

The metal also rose today on demand from hedge funds for commodities, said Smith of T&K.

``With the outlook for global growth, we're talking about another 10 years of this commodity rally,'' he said. ``The big fund traders are really finding commodities attractive and moving into these markets.''

The UBS Bloomberg CMCI Index of 26 commodities climbed to a record today, led by gains in metals, crude oil and sugar. The three-month index reached 1,257.29, the highest ever. The index has gained every year since 2001.

JPMorgan Securities Ltd. boosted its 2008 copper forecast by 19 percent today. The metal will average $6,950 a metric ton next year, up from the previous estimate of $5,821 a ton. Still, growing inventories of the metal will limit price gains, JPMorgan said.

Stockpiles of the metal monitored by the London Metal Exchange rose 2,725 tons today, or 1.8 percent, to 154,175 tons. Supplies in London have gained 18 percent this month.

On the London Metal Exchange, copper for delivery in three months gained $105, or 1.4 percent, to $7,870 a metric ton ($3.57 a pound). The metal rose to a record $8,800 a ton in May 2006.

To contact the reporter on the story: Millie Munshi in New York at [email protected]

Last Updated: October 26, 2007 14:22 EDT