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Copper Rises as Stronger Manufacturing Bolsters Demand Prospects

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By Agnieszka Troszkiewicz

Copper rose in New York, extending its best start to a year since 2003, as stronger gauges of manufacturing in China and India bolstered demand prospects.

The official purchasing managers’ index for China, the biggest global copper user, gained to 50.5 in January, the country’s statistics bureau said. Indian manufacturing swelled at the fastest pace in eight months. The Institute for Supply Management may say today its U.S. manufacturing measure increased at a swifter rate last month, according to economists.

“The market-mover will be the ISM index,” Gianclaudio Torlizzi, an analyst at T-Commodity in Milan, said by phone. “The focus in the market is on the U.S. economy,” while the Chinese index shows that “the soft-landing scenario is the most likely one” for the Asian nation, he said.

Copper for March delivery climbed 0.7 percent to $3.8165 a pound by 7:28 a.m. on the Comex in New York. Prices advanced 10 percent in January, the most since October. Copper for three- month delivery rose 0.9 percent to $8,393 a metric ton on the London Metal Exchange.

The ISM factory index, due at 10 a.m. New York time, reached 54.5, the highest level since June, according to the median estimate of economists surveyed by Bloomberg News. An Indian purchasing managers’ index rose to 57.5, HSBC Holdings Plc and Markit Economics said. The U.S. is the second-biggest copper user and India ranks eighth, researcher CRU says.

‘Overbought’ Market

“The bigger picture is quite bullish for metals,” Torlizzi said. “We expect the ECB and Federal Reserve will continue to adopt a very dovish approach to monetary policy.”

Still, metals are poised to fall for now after the market became “overbought,” he said, adding that Chinese buyers view current prices as too high. The LME Index (LMEX) of the six main industrial metals traded on the U.K. exchange is up 11 percent this year, helped by better-than-expected economic reports and prospects for the Fed to keep U.S. interest rates low into 2014.

A strike by copper miners at Teck Resources Ltd. (TCK/B)’s Quebrada Blanca project in Chile is likely to start Feb. 6, union official Jorge Flores said yesterday. The country accounts for about a third of world supply of the metal. Strikes in the country helped to disrupt supply last year.

“While this year could see a pickup in global production, copper mine supply remains vulnerable to disruptions,” Stefan Graber, an analyst at Credit Suisse AG in Singapore, said in a report.

Nickel for three-month delivery on the LME was little changed at $20,862 a ton. BHP Billiton Ltd. (BLT), the world’s fourth- largest producer, said it will reduce mining activity at its West Australian operations by 30 percent because of weak prices and gains by the Australian dollar.

Aluminum and lead rose in London. Tin and zinc fell.