copper climbs most in a week

Copper Climbs Most in a Week as Chinese Inventories Decline

http://www.bloomberg.com/apps/news?pid=20601012&sid=aJYXp4t7yAj8&refer=commodities

By Millie Munshi

Nov. 23 (Bloomberg) -- Copper rose the most in a week after inventories plunged in China, the world's biggest user of the metal.

Stockpiles monitored by the Shanghai Futures Exchange dropped 21 percent to 44,855 metric tons this week, marking the biggest decline since the week ended Jan. 25. Copper, used in pipes and wires, has more than tripled in the past four years as demand grew in China, the world's fastest-growing major economy.

``The market is doing well after the decline in Shanghai inventories,'' said Eric Wittenauer, an industrial-metals analyst at A.G. Edwards & Sons Inc. in St. Louis. ``The drop in inventories reiterates that in the near term, the supply situation remains tight.''

Copper futures for March delivery gained 9.95 cents, or 3.4 percent, to $3.0295 a pound on the Comex division of the New York Mercantile Exchange, marking the biggest percentage gain for a most-active contract since Nov. 14.

Chinese copper use rose 38 percent in the eight months ended Aug. 31, the International Copper Study Group said on Nov. 16. Demand will continue to rise as the Chinese economy accelerates, said Patricia Mohr, an analyst at Scotiabank Group in Toronto.

``Underlying demand for copper in China remains strong,'' Mohr said. ``I don't think there's been any real change there that would lower physical demand in China.''

Equities Rebound

Copper also rose as U.S. equities rebounded, easing concern that the U.S. economy is deteriorating. The Standard & Poor's 500 Index climbed as much as 1.7 percent. Industrial metals have the highest correlation among all commodities to the equity market, according to Deutsche Bank AG.

Copper still dropped 5.3 percent this week on speculation that slower economic expansion will curb demand in the U.S., the world's second-largest copper consumer.

Federal Reserve officials this week cut their 2008 U.S. growth forecasts, predicting the economy will expand by 1.8 percent next year. Copper has dropped 20 percent since reaching an 11-month high on May 4 as a slump in U.S. housing slowed the economy and reduced metals usage.

``The dominant downtrend is likely to remain intact as concerns about the economy linger,'' Wittenauer of A.G. Edwards said.

On the London Metal Exchange, copper for delivery in three months gained $144, or 2.2 percent, to $6,709 a ton ($3.04 a pound) at 6:43 p.m. London time. The price has climbed 6 percent this year.

To contact the reporter on the story: Millie Munshi in New York at [email protected] .

Last Updated: November 23, 2007 13:44 EST