Copper Rises as Global Inventories Drop, Chinese Demand Climbs...

Copper Rises as Global Inventories Drop, Chinese Demand Climbs

By Halia Pavliva and Millie Munshi

Feb. 13 (Bloomberg) -- Copper prices in New York jumped the most in a month as global stockpiles declined and demand in China, the world's biggest consumer of the metal, climbed.

Inventories monitored by exchanges in London, New York and Shanghai fell 1 percent, the biggest drop in two weeks. China's copper and copper-product imports jumped 44 in January from a year earlier. Prices reached a record $4.04 in May, partly because of surging consumption in China.

``There's talk that after the Chinese New Year, buyers are going to come back into the market,'' said Matthew Zeman, a metals trader at LaSalle Futures Group in Chicago. ``Any time you have a new year, you have new projects starting up, and that's going to boost metals demand.''

Copper futures for March delivery rose 10.2 cents, or 4.1 percent, to $2.5795 a pound at 11:48 a.m. on the Comex division of the New York Mercantile Exchange. A close at that price would mark the biggest percentage gain since Jan. 10. Priced dropped 1.7 percent yesterday. Before today, the metal had dropped 14 percent this year as inventories climbed to the highest since June 2004.

The Shanghai Futures Exchange will closed next week for the Lunar New Year holidays.

Shares of Freeport-McMoRan Copper & Gold Inc., owner of one of the world's biggest copper mines, rose as much as 4.9 percent. Metal companies' shares jumped on speculation Alcoa Inc., the world's largest aluminum producer, may face a takeover bid.

Global stockpiles of copper, which is used in pipes and wires, fell 2,800 metric tons today to 272,732 tons. Copper prices have more than tripled in the past five years because of increasing demand in China.

`Improving Demand'

``Copper is more than making up yesterday's losses, as participants find it hard to ignore the steady news from China of improving cooper demand,'' Edward Meir, a commodities analyst at Man Financial Inc. in Darien, Connecticut, said in a report.

China imported 11 percent more of the metal and its products in December, the first year-on-year gain since October 2005, the Beijing-based customs office said on its Web site yesterday. Chinese copper imports had been declining because of an increase in domestic production, releases from state stockpiles and more use of copper scrap as an alternative.

Chinese imports of refined copper and alloys rose 55 percent to 101,344 tons in December, according to customs figures.

Inventories monitored by the London Metal Exchange declined 1.3 percent to 231,250 metric tons, the biggest decline in two weeks.

On the LME, copper for delivery in three months rose $240, or 4.4 percent, to $5,710 a metric ton.

Copper output in Zambia, Africa's biggest producer of the metal, dropped 21 percent in December, the Bank of Zambia said in statement today.

Production fell to 35,709 metric tons from 44,957 tons a year earlier, the central bank said. Exports declined 29 percent to 34,383 tons from 48,480, it said.

To contact the reporters on the story: Halia Pavliva in New York at [email protected] ; Millie Munshi in New York at