Shanghai Copper Rises From Nine-Month Low on Lower Stockpiles

Copper futures in Shanghai rose from a nine-month low following a reduction in global stockpiles and speculation that China, the world’s largest consumer of the industrial metal, may step up imports.

Inventories monitored by the London Metal Exchange fell by 2.7 percent, the most in three months, to 192,975 metric tons Jan. 19, with the biggest decline in South Korean warehouses, the most probable location for shipments to China. The volume of stockpiles bought and due for delivery, referred to as canceled warrants, has more than doubled since the start of the year to stand at 16,825 tons the same day.

“The changes in stockpiles and canceled warrants has got to have a lot to do with Chinese imports which we expect to rise,” said Cai Luoyi, an analyst at China International Futures (Shanghai) Co., today.

Copper for delivery in March on the Shanghai Futures Exchange rose 1,040 yuan, or 2.0 percent, to settle at 52,330 yuan ($6,730). The contract fell to 50,920 yuan on Jan. 19, the lowest since April 3, 2006.

Metal for immediate delivery in Changjiang, Shanghai’s biggest spot market, fell as much as 1,410 yuan, or 2.6 percent, to 55,480 yuan a ton today.

Copper for delivery in three months on the London Metal Exchange rose $35, or 0.6 percent, to trade at $5,640 a ton at 4:47 p.m. Shanghai time, after rising 1.2 percent on Friday.

China imported 11 percent more of the metal and its products in December, the first year-on-year gain since October 2005. Chinese imports of copper and copper products in 2006 dropped 19 percent to 2.1 million tons.

Supply Surplus

Copper supplies from mines and scrap yards exceeded demand by 51,000 metric tons in October, compared with a deficit of 16,000 tons in September, as the U.S. usage fell 14 percent, the International Copper Study Group said Jan. 18. Global copper production exceeded demand by 353,000 metric tons in the 11 months through November 2006 as consumption in China fell 2.8 percent, the World Bureau of Metal Statistics said Jan. 17.

Stockpiles monitored by the London, New York and Shanghai exchanges rose 51 percent in the past four months. Prices have slumped 35 percent from all-time highs touched in May 2006.

Shanghai aluminum rose the first day in five by 190 yuan, or 1.0 percent, to settle at 19,600 yuan a ton.

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

Source: www.bloomberg.com