Bull market for copper, no sign of slowing

The bull market in copper doesn’t seem to want to go away. The base metal, which was selling above $1.40(US) per lb at the end of 1987 and has been selling in the $1 range for a good part of this year, is back in hot demand.

At least one producer in the United States, Asarco Inc., was recently listing a price of $1.48, while the December price on the New York Commodity Exchange was trading in the $1.33-$1.35 range.

(The London Metal Exchange cash price of copper, which is averaging close to $1.10 this year, averaged 81 in 1987 and 62 in 1986.) A stronger industrial demand linked with fears of tight supplies (a miners’ strike in Peru is not expected to help matters) are two reasons cited for the rise in the metal’s price.

“There’s obviously a short-term shortage of physical copper,” William Deeks of Noranda Inc. (TSE) told The Northern Miner. Deeks, president of Noranda Sales Corp., said inventories on both COMEX and the LME have fallen to low levels, in particular on the former.

After a relatively “soft” summer, the current rise in the copper price is unexpected, Deeks said. Options buying during the summer (when prices were lower) for delivery now is also affecting the market. Deeks said the price of copper is probably at or near its peak and any further price increase would be short-lived.

Another reason for the price run-up, according to investment firm Shearson Lehman Hutton which recently published its Annual Review of the World Copper Industry 1988, is a world economy which has shown significant resilience this year, helping to keep the demand for copper firm.