Copper Heads for Weekly Gain on Speculation Use May Beat Supply...

Copper Heads for Weekly Gain on Speculation Use May Beat Supply

By Chanyaporn Chanjaroen

Oct. 20 (Bloomberg) -- Copper headed for its first weekly gain this month as slumping inventories fueled speculation that supplies of the metal used in cables and plumbing may lag behind demand.

Stockpiles of copper tracked by exchanges in London, New York and Shanghai are down 1.4 percent this week to 173,418 metric tons, or less than four days of global usage. Goldman Sachs Group Inc. last month forecast production would fall short of demand by 101,000 tons this year. Prices are up 9 percent in London since reaching a two-month low on Oct. 4.

``Supplies are getting tighter,'' said Stephen Briggs, a London-based analyst at Societe Generale who has tracked metals since 1980. ``There's a possibility that stockpiles will fall again.''

Copper for delivery in three months rose $15, or 0.2 percent, to $7,675 a metric ton at 1:38 p.m. on the London Metal Exchange. A close at that price would leave copper up 2.8 percent for the week, the first gain in four weeks. Copper is up 94 percent in the past year, reaching a record $8,800 on May 11.

Copper for delivery in December rose 0.05 cent to $3.51 a pound at 8:37 a.m. on the Comex division of the New York Mercantile Exchange. Still, a close at that price would leave prices up 2.8 percent for the week. A futures contract is an obligation to buy or sell a commodity at a fixed price for a specific delivery date.

Sean Corrigan, chief investment strategist at London- and Lausanne-based Diapason Commodities Management, said there's a ``a lot'' of metals demand and supplies remain ``tight.''

Slowing Demand

Prices may yet fall next week because of weakening economic growth that may slow demand for metals, according to seven of 13 analysts, investors and traders surveyed by Bloomberg yesterday and Oct. 18. Five expected a gain and one little change.

``We are becoming increasingly concerned with what we see as a manufacturing slowdown,'' said Mark Lewon, vice president for operations at Utah Metal Works Inc. in Salt Lake City. ``I look for lower copper prices soon.''

Nickel jumped $550, or 1.7 percent, to $32,225 a ton, the highest since at least 1987.

Among other metals traded on the LME, aluminum lost $2, or to $2,738 a ton and lead slipped $9 to $1,491 and tin dropped $50 to $9,900. Zinc rose $5 to $3,950.

To contact the reporter on this story: Chanyaporn Chanjaroen in London at [email protected]

Last Updated: October 20, 2006 08:41 EDT