Copper Surges, Leading Metals Rally, on Chinese Demand Outlook...

Copper Surges, Leading Metals Rally, on Chinese Demand Outlook

By Millie Munshi and Halia Pavliva

Feb. 13 (Bloomberg) -- Copper surged the most in seven months, leading a rally in base metals, on signs of rising demand for raw materials in China.

Chinese imports of copper and related products jumped 44 percent in January from a year earlier. Demand from China, the world's fastest growing major economy and the biggest copper consumer, has helped triple the price of the metal in the past five years. Copper is used mostly for wiring and plumbing.

``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. I see Chinese and U.S. demand continuing to be strong in the long term.''

Copper for delivery in three months gained $279, or 5.1 percent, to $5,749 a metric ton at 6:57 p.m. on the London Metal Exchange, marking the biggest gain since July 6. Prices are still down 35 percent from a record $8,800 in May.

On the Comex division of the New York Mercantile Exchange, copper futures for March delivery gained 10.75 cents, or 4.3 percent, to $2.585 a pound, the biggest gain for a most-active contract since Oct. 16.

``The Chinese import numbers were extremely strong,'' said Michael Guido, director of hedge-fund marketing at Societe Generale SA in New York. ``Chinese growth is bringing strength to the whole complex, which looks very strong. People are starting to see these levels as being a little oversold.''

Metals Boost

Metals prices also got a boost from a report in the Times of London that BHP Billiton and Rio Tinto Group are planning takeover bids for Alcoa Inc., the world's largest aluminum producer.

A possible bid for Alcoa shows the buyers see continued strong demand for metals, Guido said.

``The global macro picture still looks very strong with no signs of a hard landing anywhere,'' Guido said.

Mining company shares gained after the takeover news. Shares of Freeport-McMoRan Copper & Gold Inc., owner of one of the world's biggest copper mines, rose as much as 4.9 percent.

Aluminum rose the most in more than three months in London after protests in Guinea, the west African county that has on third of the world's bauxite, the key raw material for making the lightweight metal.

Guinean President Lansana Conté declared martial law in the country and deployed security forces and tanks after the main trade unions resumed a general strike, Agence France-Presse reported, citing residents.

Aluminum for delivery in three months on the London Metal Exchange gained $113, or 4.2 percent, to $2,820 a metric ton. Earlier, the contract rose as much as 4.3 percent to $2,822, the biggest intraday gain since Nov. 9. The metal has increased 13 percent in the past year.

Also on the LME, nickel gained $1,125 to $36,000 a ton, tin rose $120 to $12,595 a ton, zinc gained $110 to $3,220 a ton and lead rose $15 to $1,675 a ton.

A futures contract is an obligation to buy or sell a commodity at a fixed price for delivery by a specific date.

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