Copper Gains in London, Ending Worst Losing Streak in a Decade

By Chanyaporn Chanjaroen

Dec. 8 (Bloomberg) -- Copper rallied from its worst losing streak in a decade in London, buoyed by a weaker dollar and U.S. President-elect Barack Obama’s pledge to begin the biggest public works program in about 50 years. Aluminum and zinc also advanced.

The relationship between copper and the euro-dollar exchange rate has strengthened, with a correlation of 0.6 this quarter, compared with 0.44 in the first three quarters of the year. A reading of one would suggest the two move in tandem.

“All metals have been oversold,” said Michael Khosrowpour, an analyst at Triland Metals Ltd. in London. “They rose today in conjunction with the dollar’s decline.”

Copper for delivery in three months advanced $198, or 6.5 percent, to $3,248 a ton as of 10:47 a.m. local time, paring this year’s loss to 51 percent. The metal had fallen for seven consecutive sessions, the longest stretch since December 1998.

Commodities rebounded from last week’s losses on speculation spending on roads, bridges and repairing school buildings will boost raw material demand and engineer a recovery in the world’s largest economy. Obama said his economic plan would create or preserve more than 2.5 million jobs.

LME-monitored copper stockpiles added 3,425 tons, or 1.2 percent, to 300,725 tons, the exchange said, the highest since Feb. 20, 2004. Combined with those tracked by exchanges in New York and Shanghai, they totaled 335,947 tons, or 6.5 days of global consumption, according to Bloomberg calculation. Last year’s average was 4.9 days.

Short Positions

Hedge-fund managers and other large speculators increased their net-short position in New York copper futures in the week ended Dec. 2 by 10 percent, according to U.S. Commodity Futures Trading Commission data.

Speculative short positions, or bets prices will fall, outnumbered long positions by 17,722 contracts on the Comex division of the New York Mercantile Exchange, the Washington- based commission said in its Commitments of Traders report on Dec. 5.

Young Poong Corp., South Korea’s second-largest zinc producer, started reducing output by 10 percent today because of weakening demand and falling prices, the company said. The company has a capacity to produce 303,000 tons of zinc a year, according to its Web site.

Among other LME-traded metals, aluminum increased $46, or 3.1 percent, to $1,537 a ton, lead rose $34 to $1,004 a ton and zinc advanced $52 to $1,124 a ton. Tin gained $650, or 5.7 percent, to $12,050 a ton.

-- With reporting by Shinhye Kang in Seoul. Editors: Stuart Wallace, James Ludden.

To contact the reporter on this story: Chanyaporn Chanjaroen in London at cchanjaroen@bloomberg.net