BLBG: Copper Rises in London on Speculation China Will Purchase Metal
Copper rose in London, erasing this week’s loss, on speculation that China’s State Reserve Bureau, the country’s stockpiling agency, will purchase the metal amid signs it started buying aluminum.
Aluminum inventory in warehouses monitored by the Shanghai Futures Exchange declined 18 percent in the past week, the largest decline since April 2007, figures from the exchange today showed. China will build emergency stockpiles of copper and other items to guard against potential supply disruptions, the Ministry of Land and Resources said two days ago.
“There was a massive draw in Shanghai aluminum stockpiles and there’s some market speculation that might be due to State Reserve buying,” said Gayle Berry, an analyst at Barclays Capital in London. “If they’re doing it for aluminum, certainly it makes it even more probable we’ll see it for copper.”
Copper for delivery in three months jumped $125, or 3.9 percent, to $3,320 a metric ton as of 12:51 p.m. on the London Metal Exchange, for a weekly rise of 2.8 percent. Aluminum fell $1.50 to $1,553.50 a ton, erasing an earlier gain.
The three-month copper contract is up 8.1 percent this year compared with a 1.2 percent increase in the UBS Bloomberg CMCI Index of 26 commodities.
On the LME, copper inventories jumped 5,875 tons to 363,575 tons, the most since Jan. 30, 2004, the exchange said in its daily warehouse report. Copper for March delivery rose 3.5 cents, or 2.4 percent, to $1.514 a pound.
Index Changes
Copper is also benefiting from purchases by index funds as commodity indexes are rebalanced, William Adams, an analyst at BaseMetals.com, wrote in a report today. Changes start today for the Dow Jones AIG Commodity Indexes.
Aluminum will account for 6.99 percent of the index under the new weightings, New York-traded copper 7.3 percent, zinc 3.1 percent and nickel 2.88 percent, Dow Jones-AIG said in August. At the close yesterday, aluminum made up 6.4 percent, copper 4.74 percent, zinc 2.15 percent and nickel 1.64 percent, according to information on the Dow Jones-AIG Web site.
Nickel dropped $145 to $11,400 a ton and zinc increased $14 to $1,249 a ton. Lead gained $35 to $1,184 a ton and tin fell $100 to $11,300 a ton. Lead and tin aren’t in the Dow Jones-AIG barometers.
