Copper Rises on Speculation Seven-Session Slump Was Overdone
By Millie Munshi
Dec. 19 (Bloomberg) -- Copper gained the most in two weeks on speculation the metal's longest slump in five years was overdone amid climbing demand in China, the world's largest metal consumer.
Copper dropped 7.7 percent in the previous seven sessions, marking the longest slide since September 2002. China's copper use jumped 37 percent in the 10 months ended Oct. 31, the World Bureau of Metals Statistics said today. The metal has more than doubled in the past three years as consumption gained in China.
``Generally oversold conditions could lead to a modest bounce'' in the copper price, said Edward Meir, an analyst at MF Global in Darien, Connecticut.
Copper futures for March delivery gained 7.35 cents, or 2.6 percent, to $2.958 a pound on the Comex division of the New York Mercantile Exchange. That marked the biggest percentage gain for a most-active contract since Nov. 30.
Global demand for copper rose 4.4 percent from January to October, topping supplies by 207,000 metric tons, the bureau said.
Economic expansion in China, India and other emerging market will continue to drive demand for copper and other commodities for the next 10 to 15 years, said Michael McCormick, who helps manage about $170 million at Leyland Private Asset Management in Sydney.
``There is going to be considerable demand for commodities,'' McCormick said.
`Bearish' Trend
Still, today's rebound ``doesn't seem to be tied to any core fundamental reason,'' said Catherine Virga, an analyst at CPM Group in New York. ``The trend is still bearish.''
Before today, copper had fallen 22 percent since Oct. 1 as the subprime mortgage fallout and credit squeeze stifled the economy in the U.S., the second-largest copper user.
Copper is ``likely to remain vulnerable on continued negative news flow with further subprime losses,'' UBS AG analysts led by Cristie Parker in London said in a report on Dec. 17.
On the London Metal Exchange, copper for delivery in three months gained $130, or 2 percent, to $6,510 a metric ton ($2.95 a pound). The metal rose to a record $8,800 a ton in May 2006.
To contact the reporter on the story: Millie Munshi in New York at [email protected] .
MRX Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
