Copper Climbs Most in a Week on Record-High Shipments of Metal Into China
John Meyer, an analyst at Fairfax IS Plc, discusses Alcoa Inc.'s fourth-quarter loss and the outlook for mining companies Rio Tinto Plc and BHP Billiton Ltd. He speaks with Mark Barton on Bloomberg Television's "On the Move." (Source: Bloomberg)
Chinese imports of unwrought copper and products gained 13 percent on the month in December to 508,942 metric tons, customs figures showed today. Copper also climbed as the benchmark Shanghai Composite Index of stocks rallied on optimism Chinese officials may loosen monetary policy in an effort to spur economic growth.
The increase in imports is “a positive,” Walter de Wet, head of commodities research at Standard Bank Plc in London, said by phone. “It’s largely a function of the arbitrage that’s been open,” he said, referring to buyers capitalizing on gaps between copper prices in London and Shanghai.
Copper for March delivery advanced 2.6 percent to $3.506 a pound by 8:38 a.m. on the Comex in New York. Prices gained as much as 3 percent, the most since Jan. 3. Copper for delivery in three months rose 3 percent to $7,720 a ton on the London Metal Exchange.
Annual shipments of the metal into China dropped 5.1 percent to 4.07 million tons last year, the first decline since 2008, customs data showed.
Policy makers in the Asian country will probably ease real- estate curbs as early as the middle of the year to prevent a collapse of the housing market, according to UBS AG. Construction generates a quarter of demand for copper, used in pipes and wiring, the Copper Development Association says.
“There is still a lot of concern over tight monetary policy” in China, de Wet said. Copper “fabricators still have difficulty financing metal and stockpiling metal. Monetary policy should ease substantially before metal demand will pick up” in the country.
Aluminum for three-month delivery on the LME rose 2.1 percent to $2,153 a ton. Global demand for the lightweight metal will gain 7 percent this year, slowing from last year’s 10 percent, and will exceed supply by 600,000 tons, Alcoa Inc. (AA), the world’s third-biggest producer, said yesterday as it reported a fourth-quarter loss.
Alcoa also said it will curtail production at smelters in Italy and Spain as part of a plan to cut its global smelting capacity by 12 percent. More than 50 percent of world smelting capacity is cash-negative at about $2,000 a ton, according to Royal Bank of Scotland Group Plc.
“The recent cutback news and a pickup in warrant cancellations underpinned aluminum,” William Adams, head of research at Basemetals.com, said in a report today. Orders to draw the metal from LME warehouses, or canceled warrants, jumped 15 percent to a record 744,925 tons yesterday.
Zinc, lead, nickel and tin climbed in London. All four metals are also probably finding support on prospects for production curbs because some output would be loss-making at current prices, Adams said.
Jan 10, 2012 8:39 AM ET