BLBG: Copper Near Four-Week High As China Inventories Drop by Most in 11 Months
Copper traded near the highest level in four weeks as declines in inventories improved demand prospects of the industrial metal.
Three-month delivery copper rose as much as 1 percent to $6,840.25 a metric ton on the London Metal Exchange and traded at $6,800 at 12:52 p.m. in Shanghai. The metal rose to $6,875 a ton on June 25, the highest price since June 1. Lead advanced as much as 1.9 percent to $1,850 a ton and nickel jumped as much as 1.8 percent to $20,100 a ton, respectively.
Shanghai copper stockpiles decreased by the most in 11 months last week, to the lowest level since the week ended Feb. 19. Inventories monitored by the LME have declined 9.6 percent this year and cancelled warrants, or the metal earmarked for delivery, have increased to the highest level since March. China is the world’s largest copper user.
“Reductions in London and Shanghai inventories provided support for copper prices,” Yuan Guangshan, an analyst at Zhongcai Futures Co. said from Shanghai today. “Whether the declines can be sustained is a question and our answer is probably no.”
Copper posted the biggest weekly gain in four months last week as the dollar weakened, boosting demand for commodities. The metal, used in wires and pipes, is still almost 16 percent off an April peak on concerns that the global economic recovery may slow, hurting demand.
‘Prices Supported’
Group of 20 leaders responded to the European debt crisis with deficit-reduction targets and agreed to pursue higher capital requirements for banks once economic recoveries take hold. Leaders said nations can move at their own pace and also pledged to fulfill existing stimulus plans.
“While mixed macro data from OECD economies may continue to tug on sentiment in the coming weeks, we expect the continuation of broadly positive data flow from key developing economies to keep prices supported,” Hussein Allidina, head of commodity research with Morgan Stanley, wrote in a note today, referring to base metals.
Copper for September delivery in Shanghai jumped as much as 2.5 percent to 54,490 yuan ($8,021) a ton and traded at 54,290 yuan by the midday break.
Aluminum in London was little changed at $1,995.25 a ton, zinc was up 0.2 percent to $1,876 a ton, and tin was little changed at $18,123 a ton.
--Li Xiaowei. With assistance from Kim Kyoungwha in Singapore. Editors: Richard Dobson, Jarrett Banks.
To contact the Bloomberg News staff on this story: Li Xiaowei in Shanghai at Xli12@bloomberg.net
