Copper and Aluminum Rally on Supply Deficit

Copper and Aluminum Rally on Supply Deficit

Copper Seen Rallying as Supply Slows

Bloomberg – 

Copper prices are seen rebounding 8.4 percent as demand for the metal used in pipes and wiring expands amid signs of tightening supplies, Standard Chartered Plc forecasts.

The CHART OF THE DAY shows the 12-month average copper consumption rising to a record in China, the world’s largest buyer, while use in the U.S. climbs to the highest since 2009, based on data from the World Bureau of Metal Statistics. Global inventories have fallen by almost half this year and are near the lowest since 2008.

Wire-rod production in China will advance to 6.3 million tons this year from 6 million in 2013, driven by demand for home appliances, a survey for the International Copper Study Group showed. In the U.S., housing starts surged in July to an eight-month high. Prices will average $7,600 a metric ton in London in the fourth quarter of 2015, up from $7,010 yesterday, said Nicholas Snowdon, an analyst at Standard Chartered.

“Demand conditions are actually particularly robust,” Snowdon said in a telephone interview. “That’s the reason the market is remaining tight. That’s why we haven’t seen LME stocks start to rise. The housing market is a key driver within the U.S., in terms of demand for wiring.”

Global refined-copper output will trail consumption by 90,000 tons this year and in 2015, Morgan Stanley said this month. Mine-production growth will slow to 2 percent this year, after climbing 8.2 percent in 2013, according to the New York-based bank.

Copper fell 4.8 percent this year. China’s trade surplus surged to a record in July as export growth unexpectedly accelerated and imports fell, suggesting the U.S. and European recoveries will help sustain expansion in China.

Aluminum Extends Rally to Highest Since 2013 on Supply Deficit

Bloomberg – 

Aluminum climbed in London to the highest in almost 18 months after a report showed global production trailing consumption.

The output shortfall in the first six months of 2014 was 393,000 metric tons, compared with a 1.057 million-ton surplus in all of 2013, the World Bureau of Metal Statistics said in a report today. Demand for zinc topped output by 191,000 tons, after a surplus of 116,000 tons for 2013. Shortfalls were also seen in copper, lead and tin.

“People are coming to accept the fact that the market is moving into a deficit” in aluminum, Tim Hayes, a Richmond, Virginia-based principal at Lawrence Capital Management, said in a telephone interview. “Those deficits are going to look even larger come next year and even the year after that, and so we’re getting a lot more positive sentiment.”

Aluminum for delivery in three months climbed 1.8 percent to settle at $2,076 a ton at 5:50 p.m. on the London Metal Exchange after touching $2,083.75, the highest since Feb. 22, 2013.

Zinc gained 2.3 percent to $2,356 a ton. The market continues to tighten on improving Western demand and China’s record imports, Glencore Plc said in a presentation today.

Copper for delivery in three months gained 2.1 percent to $7,010 a ton ($3.18 a pound) on the LME. Lead, nickel and tin also advanced in London.

Copper cathode inventories tracked by the LME slumped 60 percent this year. Cathode, the pure form of copper commonly used in making wires, had a deficit in the first half of 2014, according to Glencore. The “critically low” stocks reflect tight market conditions, and stronger supply growth in the second half will be “tempered” by scrap shortages and risks including aging mines, the company said.

On the Comex in New York, copper futures for delivery in December climbed 2.5 percent to $3.1975 a pound.

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Aluminum , Comex , Copper Cathode , Copper Inventories , Copper Prices , Housing Market , Lead , LME Stocks , London Metal Exchange , Nickel , Refined Copper , Zinc

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