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Copper Rises Daily Limit in Shanghai as Global Stockpiles Fall

By Glenys Sim

May 28 (Bloomberg) -- Shanghai copper prices rose by the daily limit following a drop in stockpiles and signs of continued demand from China, the world's biggest user of the metal.

Global inventories of copper in warehouses monitored by the London Metal Exchange fell for the sixth day, by 1.5 percent to 134,125 metric tons, the lowest since Oct. 31, the exchange said on May 25. Shanghai exchange stockpiles fell 0.5 percent from a three-year high in the past week, easing concern that China may be oversupplied with the metal, used in wires and pipes.

``Stocks in China only fell by a little last week and I think the international market is placing too much emphasis on this data,'' said Li Ling, an analyst at Minmetal StarFutures Co., today. ``The main reason for the rise is the positive sentiment in the market, with Chinese investors taking cues from the international market.''

Copper for August delivery on the Shanghai Futures Exchange rose as much as 1,860 yuan, or 3 percent, to 63,650 yuan ($8,318) a metric ton from the previous close by 10:10 a.m. local time. This was up 4 percent from the previous settlement, the maximum daily fluctuation allowed by the exchange.

On the London Metal Exchange, copper for delivery in three months settled up 2.9 percent at $7,200 a ton on May 25. The exchange is closed today for a public holiday.

World refined copper consumption beat production by about 51,000 metric tons in February as China and Europe used more of the industrial metal, the International Copper Study Group said in an e-mailed statement dated May 25.

Shanghai Stockpiles

Shanghai copper prices have fallen 10 percent this month on concern that Chinese demand may take time to absorb rising stockpiles of the metal. Shanghai copper stockpiles fell by 529 metric tons to 99,027 tons, after reaching 99,556 tons a week ago, the highest since April 2004, exchange data showed.

Zinc futures for July delivery in Shanghai rose as much as 850 yuan, or 2.9 percent, to 30,650 yuan a ton at 10:13 a.m. local time. Aluminum futures for August delivery also rose 0.7 percent to 19,920 yuan per a ton at 9:48 a.m.

Zinc for delivery in three months on the London Metal Exchange rose 2 percent to $3,640 a ton on May 25, while aluminum was up 1.3 percent at $2,792 a ton.