Bloomberg News: Financial Post - June 24, 2011
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Copper rose in New York, reducing this week’s drop, as shrinking inventories fueled speculation demand is improving in China, the world’s biggest user of the metal.
Copper stockpiles tracked by the Shanghai Futures Exchange fell to a 22-month low this week, on course for a third straight monthly decline. Aluminum inventories tumbled to an 18-month low. Still, copper is heading for a fourth monthly retreat in a row, partly because of concern Chinese demand might wane after local interest rates increased.
“We’ve been getting increasingly optimistic about Chinese demand for base metals in recent weeks, and this week’s falls in Shanghai stockpiles very much reinforce these views,” said Nic Brown, an analyst at Natixis Commodity Markets Ltd. in London. “After a period of destocking earlier this year, we do seem to be heading into a restocking phase.”
Copper for September delivery gained 4.65¢, or 1.2%, to US$4.1030 a pound by 7:17 a.m. on the Comex in New York. Prices are down 0.4% this week. Copper for three- month delivery climbed 1.2% to US$9,065 a metric ton on the London Metal Exchange.
Prices also advanced as commodities rebounded from the lowest level in more than four months, lifting the Standard & Poor’s GSCI index of raw materials as much as 1.1 percent. Robusta coffee and corn paced gains.
Inflation in China
Chinese Premier Wen Jiabao said the country’s efforts to stem inflation have worked and the pace of consumer-price increases will slow, even as the nation’s top economic planner said inflation may “remain elevated for some months.” China has paused for 11 weeks in raising interest rates, the longest gap since increases began in October.
“Given the way that year-on-year base effects will reduce headline inflation over coming months, this sounds to me as though China will be able to allow growth to reaccelerate,” Brown said.
Copper stocks slid to 80,792 tons according to a survey of 10 warehouses in Shanghai, the exchange said. Inventories in two bonded warehouses dropped 3,142 tons to 23,010 tons. Aluminum inventories dropped for a 15th week to 270,495 tons, according to a survey of 20 warehouses in Shanghai, Guangdong, Jiangsu and Zhejiang provinces.
LME copper stocks slipped to 473,700 tons, paring a weekly gain, daily figures showed. Aluminum inventories fell to 4.54 million tons, rounding out a fifth weekly decline.
Aluminum for three-month delivery on the LME rose 0.2% to US$2,514 a ton and zinc was unchanged at US$2,260 a ton. Nickel advanced 0.3% to US$22,200 a ton, tin rose 0.2% to US$25,250 a ton and lead gained 0.9% to US$2,572 a ton.
BloombergNews: Financial Post