Copper led gains on the London Metal Exchange on speculation a weaker dollar will strengthen demand for commodities as an alternative investment. Copper and other industrial metals may be benefiting as investors put more money into commodity index products, a reversal from the second half of last year, according to Daniel Brebner, executive director of commodity research at UBS AG in London. The dollar fell 1.3 percent against the euro today. “The dollar definitely would be helping things,” Brebner said. “Increasingly, monetary issues are going to play an important part in the performance of commodities.” Copper for delivery in three months rose $112, or 3.5 percent, to $3,347 a metric ton at 1:15 p.m. on the LME. Aluminum climbed $21.50, or 1.6 percent, to $1,357.50 a ton and nickel jumped $325, or 3.4 percent, to $10,025 a ton. The advances in industrial metals may be limited by signs of weakening demand in China, Brebner said. Steel prices in China dropped in the first two weeks in February, after three consecutive monthly gains. “That could herald near-term weakness,” Brebner said. Stockpiles of copper in warehouses monitored by the LME rose 2,950 tons to 528,250 tons, the highest since Oct. 27, 2003. Worldwide copper stockpiles stand between 500,000 tons to 600,000 tons as manufacturers hold back on purchases, Chile’s Mining Minister Santiago Gonzalez said yesterday. Copper futures for May delivery rose 4.95 cents, or 3.4 percent, to $1.504 a pound ($3,316 a ton) on the Comex division of the New York Mercantile Exchange. Prices have “stabilized” between $1.40 and $1.50 a pound, Gonzalez said. They fell 54 percent in New York last year. ‘Difficult Environment’ Hedge funds and other large speculators increased their bets on higher commodity prices to the most since Oct. 3. Their net long position in 19 commodities has increased by 40 percent this year, according to figures from the U.S. Commodity Futures Trading Commission. “That’s just been a function of asset diversification in a very difficult environment,” Brebner said. The U.K.’s FTSE 100 stock index is down 9.6 percent this year, while copper is up 9.1 percent. “Copper has held up better than we had anticipated, partly because you had the State Reserve Bureau in China buying,” Brebner said. “There’s not a lot of excess stock available in China, according to our calculations.” Prices of aluminum in Shanghai are up 5.9 percent this year since the State Reserve Bureau in December agreed to buy 290,000 tons of the metal from domestic smelters. China will seek to buy 500,000 tons of aluminum tomorrow, a company executive said on Feb. 17. Rebuilding Stockpiles China’s wire and cable companies are rebuilding copper inventories, bolstering domestic prices, Metal Bulletin reported, citing an unidentified official at the Shanghai Electric Wire and Cable Industry Association. Zinc climbed $13, or 1.2 percent, to $1,133 a ton. The amount of zinc scheduled to be taken out of LME-monitored warehouses, known as canceled warrants, jumped 36 percent to 20,400 tons, or 5.8 percent of total inventories. Tin jumped $100 to $10,850 a ton and lead added $15.25 to $1,082.25 a ton.

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