World Business

Copper prices climb on US, China expansion

By Chanyaporn Chanjaroen (China Daily)
Updated: 2010-05-25 10:03

LONDON - Copper rose for a third day in London on speculation that the economies in China and the US will continue to expand in the face of Europe's sovereign-debt crisis.

Economic growth in the two nations, the world's biggest copper users, is broader and stronger than many people expected "even a few months ago", US Treasury Secretary Timothy F. Geithner said on Monday. "Very strong demand from China" for copper will help copper prices to climb, according to producer Grupo Mexico SAB.

"This is good news and will help soothe fears about Europe," said Robin Bhar, a metals analyst at Credit Agricole CIB in London. "For base-metals markets, it's China where growth comes from."

Copper for delivery in three months rose $36, or 0.5 percent, to $6,881 a metric ton in early trading on the London Metal Exchange. Futures for July delivery advanced 1.7 percent to $3.1135 a pound on the Comex division of the New York Mercantile Exchange.

Prices slid for a sixth straight week last week, hurt by concern that China might take more steps to control its economic growth as well as speculation that Greece's fiscal crisis may spread to other eurozone nations. Possible monetary policy actions in the Asian nation "will not impact Chinese copper demand", according to Grupo Mexico.

"In May, we expect an extremely good copper import demand from China," Chief Financial Officer Daniel Muniz said in an interview on May 21. Grupo Mexico, the country's biggest mining company, expects copper to climb above $3.25 a pound this year on Comex, he said.

Imports of copper, used in electrical equipment and construction, into China were 309,772 tons last month, according to customs figures published last week. That was about 30 percent more than the average in 2009's second half, according to Commezbank AG.

Even as European nations face hurdles, the US, China, India, Brazil and other emerging economies are "in a much stronger position today to overcome the challenges ahead", Geithner said on Monday in Beijing, where he met Chinese leaders.

Hedge fund managers and other large speculators reduced their net-long position in New York copper futures by 32 percent to 7,225 contracts in the week ending May 18, according to US Commodity Futures Trading Commission data.

Smaller stockpiles

Inventories of copper tracked by the LME slipped for a fifth day on Monday to 479,575 tons, heading for a third monthly drop in a row. Including those monitored by commodity exchanges in Shanghai and New York, they totaled 739,209 tons, the lowest since February. Bookings to remove metal from LME-monitored warehouses were little changed at 22,400 tons.

Related readings:  Copper dips as joy over EU plan fades  Copper drops to 7-week low on China tightening  China's copper stockpile may slow imports  China's largest copper maker posts profit surge in Q1

Zinc for three-month delivery on the LME climbed 1.5 percent to $1,920 a ton, paring an advance of as much as 3.7 percent. Stockpiles of the metal used to rust-proof steel jumped 3.5 percent to 586,650 tons, the highest since July 22, 2005.

US warehouses registered with the LME store 75 percent of the total.

Aluminum slipped 0.3 percent to $2,048.50 a ton and tin was unchanged at $17,600 a ton. Lead increased 0.8 percent to $1,825 a ton and nickel climbed 2.6 percent to $21,899 a ton.

Bloomberg News