Shanghai Copper Futures Gain, Reversing Earlier Losses; Zinc Up...

Shanghai Copper Futures Gain, Reversing Earlier Losses; Zinc Up

By Helen Yuan

July 26 (Bloomberg) -- Copper in Shanghai rose, reversing earlier losses, on speculation that China's imports will fall in July for the fourth straight month, reducing local stockpiles of the metal for a second week.

Refined copper and alloy imports fell 6.9 percent in June to 113,074 metric tons. Still, the world's biggest consumer of the metal imported more in the first six months than in the whole of 2006, and Shanghai Futures Exchange stockpiles almost tripled since the start of the year after a six-month decline.

``Imports of copper are likely to fall further in July from last month,'' Cai Luoyi, head of research at China International Futures (Shanghai) Co., said today. ``Supply on the cash market is tightening and stockpiles from the exchange are declining.''

Copper for October delivery on the Shanghai Futures Exchange rose 360 yuan, or 0.5 percent, to close at 68,060 yuan ($8,992) a ton. It earlier fell as much as 1.8 percent to 66,500 yuan as a drop in home sales indicated that the U.S. housing market remains mired in recession, damping demand for copper.

Copper for immediate delivery in Changjiang, Shanghai's biggest cash market, rose as much as 3.9 percent to 68,700 yuan a ton today.

London Metal Exchange copper for delivery in three months rose 0.5 percent to $7,820 a ton at 5 p.m. Shanghai time.

The Beijing-based Chinese customs office is scheduled to release preliminary copper import data for July around Aug. 10. The Shanghai exchange will issue weekly inventory data tomorrow. Shanghai copper stockpiles fell 0.9 percent last week to 91,182 tons, the exchange said on July 20.

Supply Disruptions

Global stockpiles of copper monitored by the London Metal Exchange rose 1.8 percent to 100,825 tons today, the LME said in a daily report. Still, the inventories are near their lowest in a year, and supplies from Chile remain at risk from labor disputes.

London copper prices have gained almost 5 percent since a walkout by contract workers at Codelco, the world's biggest copper producer, began on June 25. The workers plan to step up protests after failing to reach an accord with the company during negotiations this week, said Cristian Cuevas, president of the Confederation of Copper Workers, which organized the strike.

Copper use in sectors other than housing has supported U.S. demand for the metal, Richard Adkerson, chief executive officer of Freeport-McMoRan Copper & Gold Inc., said yesterday in a conference call with investors.

Sales of existing homes in the U.S. fell a fourth straight month in June, the National Association of Realtors said in Washington yesterday. Builders are the biggest users of copper in the U.S., accounting for almost half of consumption.

Stronger Dollar

A recovery in the dollar is also making the metal more expensive for holders of other currencies, which contributed to today's early losses, Cai of China International Futures said.

The dollar traded near the strongest in more than two weeks against the euro on speculation the world's biggest economy can withstand rising mortgage defaults. It was at $1.3720 per euro at 5:34 p.m. Shanghai time after rising 0.7 percent yesterday.

Zinc futures in Shanghai for September delivery rose 0.8 percent to close at 29,120 yuan a ton today. October delivery aluminum fell 0.3 percent to 19,730 yuan a ton.

Zinc for delivery in three months on the London Metal Exchange rose 0.4 percent to $3,651 a ton at 5:38 p.m. Shanghai time, while aluminum fell 0.1 percent to $2,768 a ton.

Among other LME-traded metals, lead for delivery in three months rose 0.5 percent to $3,190 a ton, tin gained 0.7 percent to $15,350 a ton and nickel was up 0.2 percent at $31,450 a ton.

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

To contact the reporter for this story: Helen Yuan in Shanghai at [email protected]

Last Updated: July 26, 2007 05:51 EDT