Copper rises to trim weekly decline as price drop spurs demand

March 21, 2014 02:53 AM
Falling prices cure falling prices

Copper rose, trimming a fourth straight weekly decline as some investors said yesterday’s price drop was excessive.

The metal dropped 7.9 percent in March, heading for the worst month since May 2012, on concern demand from top-consumer China is poised to slow and as the U.S. Federal Reserve continued to trim its bond-buying program and signaled higher interest rates. Copper traders surveyed by Bloomberg are expecting prices to rise next week and Barclays Plc. today recommended buying copper, saying it’s undervalued.

“The extent of the sell-off is overdone,” Barclays analysts Kevin Norrish and Gayle Berry wrote in a report. “We believe copper has overreacted and should bounce back.”

Futures for delivery in three months rose 0.7 percent to $6,478 a metric ton by 11:04 a.m. on the London Metal Exchange after dropping 1.9 percent yesterday. Copper for delivery in May rose 0.7 percent to $2.9495 a pound on the Comex in New York.

The metal used in pipes and wires dropped 12 percent this year, the worst performer among the six main metals traded on the LME. Copper’s 14-day relative strength index has been below 30 for nine out of 11 sessions, a signal to some analysts that the metal is poised for a rebound. China’s refined copper imports dropped to 279,293 tons in February from 397,459 a month earlier, while they were higher year-on-year, customs data showed today.

The Fed’s monthly debt buying was reduced by $10 billion to $55 billion and officials forecast that the benchmark interest rate would rise to at least 1 percent at the end of 2015 from close to zero now. China’s manufacturing purchasing managers’ index for March may show contraction for a third month, analysts polled by Bloomberg said before the HSBC/ Markit report due March 24.


“All eyes will be on China’s Manufacturing PMI for March,” Vicky Sanders, head of analytics sales at Marex Spectron Group in London, said by e-mail.

Nickel advanced 1.3 percent to $16,040 a ton, poised for its seventh weekly gain in a row, the longest streak since March 2000. The metal used to make stainless steel has advanced 15 percent this year.

Lead, zinc, aluminum and tin rose in London.

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