By Glenys Sim
Feb. 18 (Bloomberg) -- Copper rebounded in Asia as Chinese investors bought the metal after it declined to the lowest in 2 1/2 weeks.
The metal lost 7 percent in the past two days on speculation waning demand will add to stockpiles that are at a five-year high of 526,425 metric tons.
“Price sensitive Chinese buyers always enter when there’s a large fall,” said Li Rong, chief analyst at Great Wall Futures Co. from Shanghai. “We’re also seeing some shorts buying back their positions to lock in profits.”
London Metal Exchange copper rose as much as 1.5 percent to $3,233 a ton and was at $3,220 as of 11 a.m. Singapore time. It dropped to $3,170 earlier in the day, the lowest since Feb. 2.
Copper for May delivery on the Shanghai Futures Exchange dropped as much as 4.9 percent to 26,050 yuan ($3,810) a ton, before trading at 26,660 yuan at the same time.
China’s apparent consumption of the metal will hold up “relatively well” this year as the government takes advantage of the current low price to rebuild stockpiles, according to Goldman Sachs JBWere Pty.
Still, like other base metals, global demand for copper will fall this year and the market will record a surplus, Goldman’s analysts led by Malcolm Southwood said in a report yesterday.
The bank expects copper supplies to exceed demand by 192,000 tons this year, before moving to an 11,000-ton deficit next year as output falls.
Copper may average $1.50 a pound ($3,308 a ton) this year, down 21 percent from a previous estimate. It will average $1.92 a pound in 2010, $2.35 in 2011, and $2.50 in 2012, down 27, 22 and 24 percent respectively from an earlier prediction.
The metal reached a record $8,940 a metric ton on July 2 and averaged $6,886 last year.
Among other LME-traded metals, aluminum rose 0.8 percent to $1,340.50 a ton and zinc added 1.1 percent to $1,122 a ton. Lead, nickel and tin had not traded as of 11:08 a.m. in Singapore.
To contact the reporter on this story: Glenys Sim in Singapore at Gsim4@bloomberg.net
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