the short term trend reverses, page-3

I think it's a right thing to sell out of your BHP puts on Friday base on what happen overnight. Copper jump 4.2% last night and oil is up a little bit as well.


Copper Futures Have Biggest Gain in 2 Months on Housing Report
April 16 (Bloomberg) -- Copper futures in New York had their biggest gain in two months after a government report showed a surge in U.S. housing starts last month, reviving expectations for increased metal demand.

Builders started work on new homes at an annual pace of 2.007 million, up 6.4 percent from February, the Commerce Department said. Economists expected 1.9 million, the median estimate in a Bloomberg News survey. Copper fell to a one-month low earlier this week after an April 9 report showed hedge funds and other speculators had reduced their holdings of the metal.

``The housing starts were good, and that brought the funds back into the market to buy,'' said Warren Gelman, president of St. Louis-based Kataman Metals Inc., which supplies recycled copper to automakers and builders.

Copper for May delivery rose 5.4 cents, or 4.2 percent, to $1.3425 a pound on the Comex division of the New York Mercantile Exchange, the biggest one-day gain for a most-active contract since Feb. 17. Prices, which reached an eight-year high of $1.403 on March 2, rose 2.9 percent this week, the first weekly gain in four weeks.

The rally accelerated after prices rose above $1.2975, triggering buying by some large speculators while others bought futures back that they had sold earlier expecting prices to keep falling, Gelman said. ``There was short-covering and new buying,'' he said.

On the London Metal Exchange, copper for delivery in three months rose $74 to $2,919 a metric ton ($1.324 a pound).

Mining Shares

Shares of Phelps Dodge Corp., the world's second-biggest copper producer, rose $1.55 to $75.10 at 2 p.m. in New York Stock Exchange composite trading, climbing for a second day. The stock had plunged 12 percent the previous five sessions as copper prices fell. New Orleans-based Freeport-McMoRan Copper & Gold Inc. rose 62 cents to $35.91.

Codelco, owned by Chile's government, is the world's biggest copper producer.

The lowest interest rates in more than four decades have fueled a U.S. housing boom. Construction is the biggest use for copper, accounting for about 40 percent of demand, according to the New York-based Copper Development Association.

Demand is growing at a time when the world is expected to produce 500,000 metric tons less than it will use this year, forcing manufacturers to dig deeper into inventories, Phelps Dodge forecast last month.

Open interest in copper futures, or the number of contracts held by traders and investors, fell 7.9 percent as of April 6 compared with a week earlier, the fourth decline in six weeks, according to the most recent report by the Commodity Futures Trading Commission.

Hedge-Fund Holdings

The number of contracts purchased by hedge funds and other speculators, minus those sold, fell 38 percent to 9,209 copper futures, the lowest ``net-long'' amount since July 1, the commission said last week. An updated tally will be released after the close of trading today. Should investors sell more futures than they buy, it will be the first ``net short'' in copper futures since May 13, 2003.

Copper prices have climbed 83 percent in the past year, fueled by increased demand in China, the world's biggest copper consumer. China's economy grew 9.7 percent in the first quarter, the National Bureau of Statistics in Beijing said in a statement yesterday.

The Chinese government has taken steps to slow the economy, leading to concern that demand for cars, homes and other goods that contain copper would ease. Copper stockpiles in the six warehouses registered by the Shanghai Futures Exchange rose 0.65 percent this week.

Chinese Demand

``There is a question whether this is the beginning of a negative trend or a short-term measure which is going to create an environment of more sustained growth in China rather than the unsustainable type of growth we've been seeing,'' said James Koppel, a managing director at SG Corporate & Investment Banking, a division of France's Societe Generale SA.

Warehouses approved by the London Metal Exchange, the world's biggest metals market, held 159,900 metric tons, down 2,950 tons today, and extending this year's decline to 63 percent. Stockpiles are the lowest since July 1997.