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Copper Fluctuates as U.S. Growth, Home Sales Trail Forecasts

Industry News 09:39:08AM Dec 23, 2010 Source:SMM

Dec. 22 (Bloomberg) --Copper futures fluctuated in New York after reports showed the U.S. economy and sales of existing homes expanded less than forecast, while house prices rose in October from the previous month.

The world’s biggest economy expanded at a 2.6 percent annual rate in the third quarter, data from the Commerce Department showed, less than the median forecast for a 2.8 percent gain in gross domestic product in a Bloomberg News survey.

Purchases of existing homes increased 5.6 percent in November from the prior month to a 4.68 million annual rate, the National Association of Realtors said in Washington. Economists projected sales would rise to a 4.75 million pace. Home prices rose 0.7 percent from September, the Federal Housing Finance Agency said.

"GDP was neutral,” William Adams, an analyst at Basemetals.com in London, said in an e-mail. "The figure I think the market will latch onto is the rise in the House Price Index. Higher house prices will restore confidence with households -- the backbone of the U.S. economy.”

Copper for delivery in March fell 0.6 cent, or 0.1 percent, to $4.27 a pound at 10:55 a.m. on the Comex in New York, after earlier today touching a record $4.2965. Copper for delivery in three months lost 0.2 percent to $9,350 a metric ton on the London Metal Exchange. The metal reached a record $9,392 a ton in London yesterday.

Tight Market

The revised increase in U.S. GDP compared with a 2.5 percent estimate issued last month. The 0.7 percent increase in home prices compared with a projection by economists for a 0.2 percent decline from the prior month, according to the median of 13 estimates in a Bloomberg survey. Prices fell 3.4 percent in October from a year earlier.

Construction accounts for a quarter of copper demand, according to the Copper Development Association. The U.S. is the second-biggest copper user, after China.

"Against a better demand outlook for next year, supply forecasts point to a tight market and higher prices in early 2011,” Chris Weafer, chief strategist at UralSib Financial Corp. in Moscow, said in a report today. Gains in the metal will be "positive for other industrial metals, as copper tends to dictate the directional trend,” he wrote.

The International Copper Study Group is expecting a 435,000-ton global deficit in the refined metal next year.

The Collahuasi copper mine in Chile, the world’s third- biggest, said Dec. 20 it won’t ship the metal from the northern Patache port until further notice after an accident shut down the port. A monthlong strike at Collahuasi helped drive copper prices to a record earlier this month.

Tin for three-month delivery on the LME fell 0.9 percent to $26,650 a ton. Nickel lost 0.5 percent to $24,500 a ton and zinc slid 0.2 percent to $2,325 a ton. Aluminum gained 0.9 percent to $2,456.50 a ton and lead rose 0.5 percent to $2,445 a ton.
 


 

Copper Fluctuates as U.S. Growth, Home Sales Trail Forecasts

Industry News 09:39:08AM Dec 23, 2010 Source:SMM

Dec. 22 (Bloomberg) --Copper futures fluctuated in New York after reports showed the U.S. economy and sales of existing homes expanded less than forecast, while house prices rose in October from the previous month.

The world’s biggest economy expanded at a 2.6 percent annual rate in the third quarter, data from the Commerce Department showed, less than the median forecast for a 2.8 percent gain in gross domestic product in a Bloomberg News survey.

Purchases of existing homes increased 5.6 percent in November from the prior month to a 4.68 million annual rate, the National Association of Realtors said in Washington. Economists projected sales would rise to a 4.75 million pace. Home prices rose 0.7 percent from September, the Federal Housing Finance Agency said.

"GDP was neutral,” William Adams, an analyst at Basemetals.com in London, said in an e-mail. "The figure I think the market will latch onto is the rise in the House Price Index. Higher house prices will restore confidence with households -- the backbone of the U.S. economy.”

Copper for delivery in March fell 0.6 cent, or 0.1 percent, to $4.27 a pound at 10:55 a.m. on the Comex in New York, after earlier today touching a record $4.2965. Copper for delivery in three months lost 0.2 percent to $9,350 a metric ton on the London Metal Exchange. The metal reached a record $9,392 a ton in London yesterday.

Tight Market

The revised increase in U.S. GDP compared with a 2.5 percent estimate issued last month. The 0.7 percent increase in home prices compared with a projection by economists for a 0.2 percent decline from the prior month, according to the median of 13 estimates in a Bloomberg survey. Prices fell 3.4 percent in October from a year earlier.

Construction accounts for a quarter of copper demand, according to the Copper Development Association. The U.S. is the second-biggest copper user, after China.

"Against a better demand outlook for next year, supply forecasts point to a tight market and higher prices in early 2011,” Chris Weafer, chief strategist at UralSib Financial Corp. in Moscow, said in a report today. Gains in the metal will be "positive for other industrial metals, as copper tends to dictate the directional trend,” he wrote.

The International Copper Study Group is expecting a 435,000-ton global deficit in the refined metal next year.

The Collahuasi copper mine in Chile, the world’s third- biggest, said Dec. 20 it won’t ship the metal from the northern Patache port until further notice after an accident shut down the port. A monthlong strike at Collahuasi helped drive copper prices to a record earlier this month.

Tin for three-month delivery on the LME fell 0.9 percent to $26,650 a ton. Nickel lost 0.5 percent to $24,500 a ton and zinc slid 0.2 percent to $2,325 a ton. Aluminum gained 0.9 percent to $2,456.50 a ton and lead rose 0.5 percent to $2,445 a ton.