Copper prices jumped the most in three weeks after a gain in US building permits boosted demand prospects for the metal used in electrical wiring and plumbing.
Permits, a gauge of future construction, rose 2.1 per cent last month to a 586,000 annual pace, the government said today. The gain was the first since March and was more than economists expected. Housing starts fell 5 per cent from the previous month. Builders are the biggest users of copper and use about 400 pounds (181 kilograms) in the average home.
"Copper is getting a bounce from the housing numbers as people are focusing in on the permits part of the report," said Matthew Zeman, a trader at LaSalle Futures Group in Chicago. "The economic outlook is pretty mixed, so any better news is going to help."
Copper futures for September delivery rose 6.35 US cents, or 2.2 per cent, to $US3.0015 a pound on the Comex in New York. That marked the biggest gain for a most-active contract since June 25. The price has declined 10 percent this year on concern that the pace of economic growth will slow.
The metal also climbed today as inventories fell for the 23rd straight session, the longest slump in more than a year. Stockpiles monitored by the London Metal Exchange declined 0.8 per cent to 419,600 metric tons today, the lowest level since Nov. 18. Supplies have dropped 16 per cent this year.
'Exited Bear Market'
Increased copper consumption and limited supplies of refined and scrap metal will support prices, Laredo, Texas-based research company Harbor Intelligence said in a report. Usage will outpace supplies by 125,000 tons this year with the deficit widening to 180,000 tons in 2011, according to the report.
"Prices have exited the correction/bear-market phase, and we should expect higher prices for the rest of the year and early 2011," Harbor Intelligence said.
The metal will average $US3.28 this year and $US3.70 in 2011, the company said.
On the LME, copper for delivery in three months rose $US131, or 2 per cent, to $US6641 a ton ($US3.01 a pound).
Nickel, lead, tin and zinc also advanced in London. Aluminum was little changed.