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Zinc, Copper Rise to Records in London as Inventories Decline
March 21 (Bloomberg) -- Zinc and copper rose to records in London as a decline in inventories signaled strengthening demand from China, the largest consumer of both metals.

Zinc stockpiles tracked by the London Metal Exchange fell 2,400 tons, or 0.8 percent, to 302,700 tons today, equal to less than 11 days of global consumption. Inventories have dropped 48 percent in the past year. Copper stockpiles dropped 750 tons, or 0.6 percent, to 130,300 tons, or less than three days of usage.

``All is still down to China's demand and supply constraints,'' said Juan Pablo Orjuela, a London-based analyst at Koch Metals Trading Ltd., a member of the LME. ``There's good physical demand for zinc and users have to turn to LME stockpiles.''

Zinc for delivery in three months rose $30, or 1.2 percent, to $2,500 a metric ton at 1:14 p.m. on the LME after reaching $2,510, the highest ever. Copper gained $65, or 1.3 percent, to %5,170 a ton after reaching a record $5,186.

Copper futures for May delivery rose 3.8 cents, or 1.6 percent, to $2.372 a pound on the Comex division of the New York Mercantile Exchange. Prices yesterday reached a record $2.40. A futures contract is an obligation to buy or sell a commodity at a fixed price for delivery by a specific date.

Copper consumption in China, the world's largest user, grew 9 percent last year. A 6 percent decline in demand by the U.S., the second-biggest consumer, helped send the global market close to a balance after a shortfall of 887,000 tons in 2004, the Lisbon-based International Study Group said March 16.

Copper Demand

Global copper demand will grow 5.9 percent in 2006 to 17.8 million tons, beating production for a fourth consecutive year, consultant Bloomsbury Minerals Economics Ltd. said on Feb. 20.

China became a net importer of zinc for the first time in 2005 as its booming economy stoked demand for steel needed for buildings, cars and appliances. The country imported 620,816 tons last year, equal to about 6 percent of world demand, as steel production jumped 25 percent. Demand for zinc will outpace supply by 210,000 metric tons this year, according to Deutsche Bank AG.

``The zinc market is going to become as tight as copper,'' Stephen Briggs, an analyst at Societe Generale in London who has followed metals for 25 years, said yesterday. ``Every speculator is buying zinc now.''

Kagara Zinc Ltd., an Australian producer supplying metal to Korea Zinc Co., shut its smelter in northern Australia after Cyclone Larry left the plant without power. The smelter may be shut for a week, Joe Treacy, the company's executive director, said today by phone from Queensland.

The plant, which processes over 100,000 tons of zinc concentrate a year, wasn't damaged.