Copper rose in New York as gains by the yuan spurred buying from China, the world’s biggest consumer of the metal. The yuan strengthened beyond 6.4 per dollar for the first time since 1993, supported by the Federal Reserve’s pledge to keep interest rates at a record low. That helped to reopen so- called arbitrage into China, with London Metal Exchange import prices about $55 a metric ton lower than Shanghai, William Adams, an analyst at Basemetals.com, said in a report today. “The arbitrage opening triggered very large turnover overnight,” said Leon Westgate, a London-based analyst at Standard Bank Plc. “This will likely be reflected in higher Shanghai bonded premiums and see aggressive destocking of bonded warehouse stocks.” Copper for September delivery gained 10.25 cents, or 2.6 percent, to $3.991 a pound by 7:28 a.m. on the Comex in New York. Copper for three-month delivery rose 2.7 percent to $8,827 a ton on the LME. Arbitrage traders try to profit by buying the metal in London and selling it in Shanghai, exploiting price differences between the markets. Stockpiles in bonded warehouses in China increased by 50,000 to 100,000 tons at the end of July, Standard Bank said yesterday. Credit Policy China probably had used up about half a million tons of copper stockpiles earlier this year, according to a UBS AG estimate. Destocking in copper was tied to the fact that China was tightening its credit policy, Peter Hickson, global head of commodities research at the company’s investment-banking unit, said in an interview. The yuan strengthened the most since November and 12-month non-deliverable forwards climbed to a three-month high after the central bank’s daily fixing had its biggest jump of 2011. China’s consumer prices climbed 6.5 percent last month from a year earlier, the fastest in three years, official data show. Copper imports by China climbed in July to the highest level since January as traders bought the metal before an expected seasonal rise in demand, customs figures showed yesterday. Imports of refined metal, copper alloy and semi- finished products gained for a second month, rising 9.5 percent to 306,626 tons. Aluminum, nickel, tin, lead and zinc gained in London. To contact the reporter on this story: Maria Kolesnikova in London at mkolesnikova@bloomberg.net To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net.

Source