Copper, Nickel Lead Metal Gains on Chinese Economic Growth

Copper rose the most in two weeks in London and nickel traded at a record for a seventh day after China, the world’s largest consumer of industrial metals, said its economy expanded at the fastest pace in 11 years.

Gross domestic product in China expanded 10.4 percent in the fourth quarter from a year earlier, the National Bureau of Statistics said in Beijing today. The world’s fourth-largest economy grew 10.7 percent in 2006.

“This is supporting demand for metals,” RBC Capital Markets traders led by Alex Heath in London said in a report today. Heath has traded metals on the London Metal Exchange, the world’s biggest metals bourse, for about 30 years.

Copper for delivery in three months on the LME gained $135, or 2.4 percent, to $5,850 a metric ton as of 12:39 p.m. local time. The metal has declined 7.6 percent this year.

The LME’s index of six industrial metals has more than quadrupled in five years as China’s booming economy stokes demand for the raw materials needed for cars, buildings and appliances. Chinese copper consumption will climb 7.8 percent in 2007, according to Maike Futures Co. in Shanghai.

The metal extended gains today even after the exchange reported that stockpiles rose 2.7 percent to 203,375 tons, the first time they have surpassed 200,000 tons since March 2004.

Producers of copper are still expanding output to benefit from higher prices. Jiangxi Copper Co., China’s biggest producer, said today it will increase capacity by 25 percent this year to 550,000 tons, and to 700,000 tons next year.

Codelco, the world’s largest producer, plans to invest a record $2.4 billion at mines in Chile this year, seeking to reverse a drop in copper output that began last year. Current copper prices are “excellent,” Chile Mining Minister Karen Poniachik said yesterday in an interview in Davos, Switzerland.

Nickel Gains

Nickel for three-month delivery rose as much as $1,348, or 3.6 percent, to $38,798 a ton, beating yesterday’s record by $296. Prices of nickel have more than doubled in the past 12 months as production of stainless steel in China expanded almost 50 percent last year, according to London-based GFMS Metals Consulting Ltd.

Workers at Xstrata Plc’s Sudbury nickel unit in Canada may strike if a new contract isn’t agreed by the end of January. Talks made “slow progress,” Rick Grylls, a spokesman for the union representing over 1,000 workers at Sudbury, said Jan. 23. The global deficit was 80,000 tons during January-November, according to the World Bureau of Metal Statistics.

Metal Holdings

More than 90 percent of the LME-monitored nickel stockpiles were held by a single firm as of two days ago, data from the bourse show.

The so-called warrant cash holdings, documents on the ownership of metals registered at LME-monitored warehouses, also indicate single companies each held at least the same proportion of aluminum, aluminum alloy, lead and zinc inventories. The report was updated at 10:30 a.m. in London. The companies may no longer hold the positions as of today.

The LME data don’t include metals that have been bought and are due for delivery, known as canceled warrants.

As of yesterday, nickel stockpiles excluding the so-called canceled warrants were 2,700 tons, aluminum totaled 707,775 tons, aluminum alloy 98,920 tons, lead 36,825 tons and zinc 7,700 tons.

Among other metals traded on the LME, aluminum rose $26 to $2,830 a ton, lead added $20 to $1,705 and tin advanced $150 to $12,400. Zinc increased $55 to $3,750.

Source: www.bloomberg.com