Copper rises in London on speculation China will purchase metal
Publishing Date 09 Jan 2009 11:39am GMT Author Copper rose in London, erasing this week’s loss, on speculation that China’s State Reserve Bureau, the country’s stockpiling agency, will purchase the metal amid signs it started buying aluminium.
Aluminum inventory in warehouses monitored by the Shanghai Futures Exchange declined 18% in the past week, the largest decline since April 2007, figures from the exchange today showed. China’s Ministry of Land and Resources said two days ago the country would build emergency stockpiles of copper and other items to guard against potential supply disruptions.
“There was a massive draw in Shanghai aluminium stockpiles and there’s some market speculation that might be due to State Reserve buying,” said Gayle Berry, an analyst at Barclays Capital in London. “If they’re doing it for aluminium, certainly it makes it even more probable we’ll see it for copper.”
Copper for delivery in three months jumped US$150, or 4.7%, to US$3,345/t as of 9:26 a.m. on the London Metal Exchange, for a weekly rise of 3.5%. Aluminum gained US$16 to US$1,571/t
The three-month copper contract is up 8.8% this year compared with a 1.2% increase in the UBS Bloomberg CMCI Index of 26 commodities. On the LME, copper inventories jumped 5,875t to 363,575t, the most since Jan. 30, 2004, the exchange said in its daily warehouse report. Copper for March delivery rose 3.95 cents, or 2.7%, to US$1.5185/lb.
Copper is also benefiting from purchases by index funds as commodity indexes are rebalanced, William Adams, an analyst at BaseMetals.com wrote in a report today. Changes start today for the Dow Jones AIG Commodity Indexes.
Aluminum will account for 6.99% of the index under the new weightings, New York-traded copper 7.3%, zinc 3.1% and nickel 2.88%, Dow Jones-AIG said in August. At the close yesterday, aluminium made up 6.4%, copper 4.74%, zinc 2.15% and nickel 1.64%, according to information on the Dow Jones-AIG Web site.
Nickel rose US$144 to US$11,689/t and zinc increased US$10 to US$1,245/t. Lead gained US$16 to US$1,165/t and tin fell US$52 to US$11,348/t.
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