Copper Advances a Second Day in London on Signs of U.S. Economic Recovery

bloomberg---Copper climbed for a second day, nearing an all-time high, on speculation that further signs of an improvement in the U.S. economy will boost the outlook for demand for the metal used in pipes and wires.

The metal for three-month delivery advanced as much as 2.1 percent to $9,257.50 a metric ton on the London Metal Exchange, $10 less than the record, which was set Dec. 14. The contract was at $9,125.25 at 11:50 a.m. in Singapore, 0.6 percent higher.

The U.S. economy is picking up speed and may grow 3 percent to 3.5 percent next year, former Federal Reserve Chairman Alan Greenspan said last week. A Bloomberg News survey showed third- quarter growth might be revised to an annualized 2.8 percent, compared with an earlier Commerce Department estimate of 2.5 percent. The department will publish revised data on Dec. 22.

“There is a series of data showing an improving U.S. economic outlook, and that fuels the commodities markets,” HNA Topwin Futures Co. said in a research report today. The U.S. is the world’s largest user of copper after China.

The Conference Board’s gauge of the U.S. outlook for the next three to six months rose 1.1 percent, the most in eight months, after a revised 0.4 percent gain in October, the New York-based group said on Dec. 17. The reading matched the median forecast of economists surveyed by Bloomberg News.

“The U.S. economy unquestionably has some momentum,” Greenspan said in a Dec. 16 interview in Washington. “The fourth quarter looks good. The growth rate could be 3.5 percent or more” for the final three months of this year.

Household Spending

Separate reports this week may show an increase in U.S. consumer and business expenditure. Household purchases rose 0.5 percent last month after a 0.4 percent gain in October, according to the median estimate of economists surveyed by Bloomberg News before Dec. 23 figures from the Commerce Department. The same day, the agency may show demand for durable goods excluding cars and aircraft climbed 2 percent.

A so-called dominant position, indicated in a Warrant Cash Banding Report from the LME, showed one holder held 50 percent to 79 percent of copper stockpiles and open positions for the next three trading days as of Dec. 15. At least 90 percent had been held by the company on Dec. 10, according to the bourse.

“The majority of LME’s stockpiles being held by one single company has created an artificially tight physical market,” Wang Ning, an analyst at Xiangyu Futures Co., said by phone from Shanghai. “This has given copper a boost while supply-and- demand news is relatively quiet.”

Potache Accident

In Chile, three workers were killed after a shiploader collapsed at Potache port, according to Collahuasi, the world’s third-largest copper mine. The accident occurred after a ship left port, Bernardita Fernandez, a spokeswoman, said yesterday.

“The mine is operating,” Fernandez said by phone. “If Collahuasi needs a place to ship copper during this period, it will find one.” Anglo American Plc and Xstrata Plc each own 44 percent of the mine.

Copper in New York gained as much as 1.6 percent to $4.2235 a pound, and traded at $4.1675. In Shanghai, copper for March delivery dropped 0.9 percent to 67,840 yuan per ton, reversing an earlier advance.

Aluminum in London was little changed at $2,337.75 a ton after gaining as much as 0.8 percent earlier. Lead dropped 0.4 percent to $2,409.75 a ton, nickel lost 0.8 percent to $24,800 a ton, tin slipped 0.2 percent to $26,000 a ton and zinc fell 0.2 percent to $2,271 a ton.

--Helen Sun. With assistance from Matt Craze in Santiago. Editors: Jake Lloyd-Smith, Ravil Shirodkar