Gold and oil fell Friday and copper continued its emergence as the new commodity of choice for punters of all shapes and sizes.
Copper extended a rally to more record highs last week as investors came to believe that the global economic recovery will boost consumption of the metal at a time when production continues to lag behind demand.
Comex March copper futures rose 6.45c, or 1.4%, to $US4.609 a pound in New York on Friday after touching a new record of $US4.613 a pound.
And LME three month metal rose $US152.25, or 1.5%, to $US10,082.25 a tonne ($US4.57 a pound) after hitting a new all time high of $US10,095 a tonne.
That left copper with a gain of 4.7% last week, the biggest weekly gain in three months.
Also in London, tin climbed 2% to $US31,150 a tonne after reaching a record $US31,199.
Aluminum, lead, nickel and zinc rose.
Bloomberg reported that Freeport McMoRan Copper & Gold, the world’s largest publicly traded copper miner, said the market will be “tight in 2011, and for the foreseeable future”.
And Rio Tinto and OZ Minerals both report profit figures this week for the 2010 year which will show that the surge in copper has been very good financially for both companies.
“Demand for copper continues to be robust and growing,” said James Dailey, who manages $185 million at TEAM Financial Asset Management LLC in Harrisburg, Pennsylvania. “Bringing copper production online is very costly and protracted, so it may be some time before production levels are able to grow fast enough to offset the growth in demand,” according to Bloomberg.
“We have continuing strong demand out of China and the prospects of continued recovery in the U.S. and in parts of Europe,” Kathleen Quirk, Freeport’s chief financial officer, said yesterday in a telephone interview from Phoenix.
“That is also overlaid on a situation where supply is very limited. Our industry hasn’t been able to expand capacity fast enough to meet the demand,” Bloomberg further reported.
The Kitco website reported: "Charl Malan, metals and mining analyst with Van Eck Global, said normal supply growth tends to be 3% to 5% annually, and he expects no more than this for the next few years despite rising global demand.
“I can’t see all of a sudden a massive jump in supply,” he said.
"Malan and Robin Bhar, analyst with Credit Agricole CIB, said it could be at least 2013 before the copper market gets back into a supply/demand surplus. Most of the new projects in the planning stages won’t be finished before then, Bhar said.
“There are lots of smaller projects and expansions to existing mines that are in analysts’ supply/demand tables,” he said. “But it doesn’t add up to enough to balance the market this year or next year.”
"Malan described most companies’ profit margins as already “incredibly high.”
Gold fell as many investors ignored the confusion over the jobs report and stuck with their belief that the global economy is still going well, as is the American economy.
The weakness came despite more uncertainty in Egypt and the Middle East.
The US dollar gained against the euro after the US jobs report.
The Australian dollar ended at $US1.0138 on Saturday morning, a small gain.
Oil was easier.
There was some early support for gold on Friday and the spot price hit a reported two week high of $US1,361 an ounce.
At the end April gold fell $US4 to $US1,349 an ounce on Comex in New York.
Crude oil fell Friday in the wake of the jobs report and the lack of any dramatic market influencing news from Egypt.
It must be remembered that US prices are out of step with the rest of the world because of the continuing oversupply of West Texas Intermediate standard crude at the Cushing delivery point in Oklahoma.
That has seen WTI in the US trade at a big discount to the Brent class crudes traded in Europe, which also are slightly inferior in quality to WTI.
Nymex March crude fell $US1.51 to settle at $US89.03 a barrel in New York.
Prices fell 0.3% for the week, but are still 22% higher over the past year.
In London, Brent crude oil March futures fell $US1.93, or 1.9%, to $US99.83 a barrel.
The contract touched $US103.37 a barrel on Thursday, the highest level since September 26, 2008.
And US sugar prices eased higher on Friday night in the wake of news about the damage caused by Cyclone Yasi.
Raw sugar for March delivery rose 0.6c, or 1.9%, to 32.64c a pound in New York.
That only partly accounted for the big losses on Thursday.
