Copper analysts are the most bullish in three weeks after manufacturing expanded from the U.S. to Europe and hedge funds bet on higher prices for the first time since November.
Fourteen analysts surveyed by Bloomberg News expect prices to gain this week, four are bearish and six neutral. The metal reached a four-month high of $7,415.50 a metric ton on Dec. 27. Hedge funds and other large speculators are holding their biggest bullish bet since February, U.S. Commodity Futures Trading Commission data show.
While the metal has been in a bear market since April, prices rallied 12 percent from this year’s low in June as stockpiles slid to a 12-month low and Barclays Plc cut its forecast for next year’s supply glut. Global manufacturing climbed in November to the strongest since April 2011 and economists surveyed by Bloomberg expect world economic expansion to accelerate next year.
“People are getting more bullish on economies,” said Donald Selkin, who helps manage about $3 billion as the New York-based chief market strategist at National Securities Corp. “I would bet that if one has to invest in commodities one should look at those commodities that are used in construction and building. Copper has definitely found a bottom.”
Copper fell 6.7 percent to $7,401.50 on the London Metal Exchange this year. The metal averaged $7,352, poised for the fourth-highest annual level on record and four times the price a decade ago. The Standard & Poor’s GSCI gauge of 24 commodities declined 0.9 percent and the MSCI All-Country World Index of equities gained 20 percent. The Bloomberg U.S. Treasury Bond Index lost 3.3 percent.
A global purchasing manager’s index from JPMorgan Chase & Co. and Markit Economics gained in November for a fifth month. U.S. manufacturing rose in November at the fastest pace in more than two years and euro-area factory output grew quicker than economists forecast in December.
The global economy will expand 2.8 percent in 2014 from 2 percent this year, according to economist estimates compiled by Bloomberg.
Global copper inventories tracked by bourses in London, New York and Shanghai slid 46 percent since June to 508,248 tons, the least since December 2012.
Refined copper imports by, China the biggest consumer, climbed 12 percent to 328,907 tons last month, 80 percent more than in April, customs data show.
Barclays, which forecast in September that supply would beat demand this year, now expects a shortage and cut its estimate for the glut in 2014 by 34 percent from its October outlook.
Next year’s surplus will total 127,000 tons as mine starts and expansions from Peru to Mongolia boost production, according to the bank.
Codelco, the biggest producer, said in October it plans to invest $4 billion to $5 billion annually in the next five years to increase output.
