April 9 (Bloomberg) -- Copper rose in London, heading for a fourth straight weekly gain, as inventories of the metal shrank, equities climbed and the dollar dropped.
Stockpiles in warehouses monitored by the London Metal Exchange fell 1.5 percent, dropping below 500,000 metric tons. That may indicate a pickup in demand, said Dan Smith, an analyst at Standard Chartered Plc in the U.K. capital. The MSCI World Index of shares added as much as 1 percent, and the Dollar Index declined as much as 0.5 percent.
“Copper is looking strong from several perspectives,” Smith said by telephone. Expectations are that next week’s release of import figures for China, the world’s largest copper consumer, will show sustained demand for the metal, he said.
Copper for delivery in three months gained $100, or 2.3 percent, to $4,500 a ton at 10:37 a.m. on the LME. It rose as high as $4,530.75, the highest since Oct. 30, and has added 4.6 percent this week. The exchange will close tomorrow and on April 13 for the Easter holiday.
Declines by the dollar reduce the cost of commodities priced in the currency for holders of other monies. The metal also climbed after a report showed Japanese machinery orders rose 1.4 percent in February, the first gain in five months.
“Economic activity data is stabilizing at low levels, providing the first indication of a recovery in global economic growth,” Michael Jansen, an analyst at JPMorgan Securities Ltd. in London, said in a report.
Higher Forecast
The bank raised its forecast for three-month copper’s average price this year to $3,338 a ton from $3,163. It expects a gain to $3,675 a ton in 2010. Still, a surplus of the metal this year that JPMorgan forecasts at 713,000 tons will weigh on prices in the current and next quarters, Jansen said.
The copper market seems to be in balance for now because supplies of scrap metal have dried up, Standard Chartered’s Smith said. About 40 percent of refined metal comes from recycling. In addition, weaker demand has spurred production cutbacks such as Xstrata Plc’s announcement this week that it would shut a smelter at the Kidd Creek plant in Canada.
“We have seen some significant supply cuts recently for copper, most notably Kidd Creek,” Smith said.
Available inventories in LME-monitored warehouses of the metal fell and 13 percent of stockpiles are earmarked for delivery. Some analysts view copper as an indicator for global growth because of its use in plumbing and wiring.
Aluminum, Nickel
Aluminum for three-month delivery rose $13, or 0.9 percent, to $1,505 a ton. The lightweight metal reached $1,518.75 on April 6, the highest since Jan. 14.
Stockpiles in LME-monitored warehouses rose to 3.6 million tons today. Prices fell 9.6 percent in the first quarter, extending two consecutive annual losses.
“Chronic excess capacity in aluminum smelting remains the long-term obstacle to a meaningful price recovery,” JPMorgan’s Jansen said in the report. The bank lowered its forecast for three-month aluminum’s average price this year by 1.7 percent to $1,438 a ton and cut next year’s prediction by 9.5 percent to $1,675 a ton.
Nickel climbed $25, or 0.2 percent, to $11,000 a ton. Oversupply will shrink this year because of a 20 percent cut in production, the most among all industrial metals, Fortis said in a monthly report. The surplus of nickel, used mostly to make stainless steel, will drop to 44,000 tons this year from 58,000 tons in 2008, Fortis said.
Tin gained 1.1 percent to $11,020 a ton, and zinc added 0.7 percent to $1,385 a ton. Lead rose 1.4 percent to $1,353 a ton.
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