Copper may rise in London, extending a two-session surge of 13 percent, on indications demand for the metal remains steady in Asia, where top global consumer China is located. Orders to draw copper from London Metal Exchange stockpiles reached a 2011 high on an increase in South Korea. Canceled warrants, as the orders are known, have doubled this month after surging more than fivefold in September. Prices also gained on optimism European leaders will hammer out details on enhancing the region’s bailout fund at a summit tomorrow. “This is a continuation of the arbitrage trade between China and LME’s Asia warehouses,” said Angus Staines, an analyst at UBS AG in London. “The key is what happens to the metal that is bought. Does it sit in Shanghai Futures Exchange warehouses, or does it flow down the supply chain?” Copper for three-month delivery advanced 0.4 percent to $7,666 a metric ton by 11:53 a.m. on the LME, paring a climb of as much as 2.4 percent to $7,820, the highest level since Sept. 22. Copper for December delivery rose 0.6 percent to $3.4705 a pound on the Comex in New York. Canceled warrants jumped 11 percent to 64,875 tons, the highest level since May 2009. Canceled warrants in LME warehouses in Asia, the closest location to China, have more than doubled in October. LME copper inventories slid 1.2 percent to 439,150 tons, the lowest level since April 4, for a 7.3 percent decline this month. Shipments to China “If they are restocking, as we suspect, it means that a higher floor will be in place than we might otherwise have expected,” said David Thurtell, head of metals research at Citigroup Inc. in Singapore. Imports of refined copper into China rose 17 percent in September from August and were up 14 percent from a year earlier, customs figures showed yesterday. The country is heading for a soft landing, and consumption is “very strong” as wages jump, John Tang, China strategist at UBS, said at the Bloomberg Link China Conference in Hong Kong today. European leaders, who will hold a second summit in four days tomorrow, are seeking an agreement on bolstering the region’s rescue fund, recapitalizing banks and providing debt relief to Greece. “Investors are starting to see their way through the crisis” in Europe, said John Meyer, a mining and metals analyst at Fairfax IS in London. “It’s been a very quick rally, so there could be some short-covering,” he said, referring to purchases made to close out bets on lower prices. Zinc for three-month delivery on the LME slipped 0.1 percent to $1,874 a ton. Producers in China are starting to cut output after metal prices fell below cash production costs for “a material proportion” of small-scale, low-grade mines, Duncan Hobbs, an analyst at Macquarie Group Ltd., said in a research report yesterday. Aluminum rose 0.4 percent to $2,226 a ton and lead fell 1.1 percent to $1,996 a ton. Nickel was little changed at $20,000 a ton and tin dropped 2 percent to $22,100 a ton. 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