By Pavliva and Munshi, Bloomberg
Mumbai: Copper prices in New York rose the most in a week as a rebound in global equity markets eased concerns a selloff in metals will persist.
The price of copper had slumped 7% in the previous five sessions as a rout in stock markets erased $2.4 trillion in market value. Asian and European shares climbed today, and US stocks gained for the first time in four days. Copper has more than doubled in the past three years as demand soared in China, the world’s biggest consumer of the metal.
“One has to look at the fundamentals and there is sustained demand for base metals and commodities from the emerging economies of China and India,” Mick Davis, chief executive officer of Xstrata Plc, one of the world’s biggest mining companies, said in an interview in London.
Copper futures for May delivery climbed 4.3 cents, or 1.6 %, to $2.7135 a pound on the Comex division of the New York Mercantile Exchange, the biggest percentage gain since 23 February. Prices still have dropped 33 % from $4.04 a pound, the highest ever, in May.
A futures contract is an obligation to buy or sell a commodity at a fixed price for delivery by a specific date.
Concerns that growth may slow in Asia helped trigger the global equities slump. China is seeking to cool growth to 8% this year from almost 11% in 2006, Premier Wen Jiabao said yesterday.
“Metals should continue to take their cue from equities,” Edward Meir, a commodities analyst at Man Financial Inc. in Darien, Connecticut, said in a report. “It will take some more time before these markets decouple completely.”
Demand Outpaces Supply
Xstrata said today that increased demand and constrained supply will ensure industrial-metal prices remain above historical levels in 2007.
Zambia’s Luanshya copper mine has lost 390 metric tons of production since a strike started six days ago. Zambia is Africa’s largest producer of copper, used in homes, cars and appliances. Copper reached a record in May, partly because of supply disruptions.
Inventories monitored by the London Metal Exchange dropped 1,125 metric tons, or 0.5 %, to 206,050 metric tons, the lowest since 25 January.
On the LME, copper for delivery in three months rose $90, or 1.5 %, to $5,972 a metric ton. Before today, prices had gained 19 % in the past 12 months.