Metalnewsnet 11 Mar:

Copper gained for a second day after China’s imports of the metal rose 10 percent in February compared with the previous month, adding to signs the economic recovery is gaining momentum.

Copper for three-month delivery on the London Metal Exchange climbed as much as 0.6 percent to $7,557 a metric ton, before trading at $7,535 at 3:45 p.m. in Singapore. Futures also climbed as shrinking stockpiles fueled optimism that the global economic recovery is driving demand.

China, the world’s biggest copper consumer, shipped 322,282 tons of copper last month, 10 percent more than in January and 2 percent less than the same time a year ago, according to Bloomberg data.

“We expect Chinese metals demand to remain robust as price spreads between London and Shanghai continued to favor import arbitrage into China,” Stefan Graber, Credit Suisse Group AG analyst, said in a note today. Arbitrage is where investors attempt to profit from price disparities for the same asset in different markets.

May-delivery copper on the Comex division of the New York Mercantile Exchange gained as much as 0.6 percent to $3.4315 a pound, while the June-delivery contract on the Shanghai Futures Exchange rose 0.6 percent to close at 60,620 yuan ($8,881) a ton.

Copper futures in London traded at a discount to Shanghai Futures Exchange contracts after gaining 9 percent last month, compared with an increase of 11.6 percent in Shanghai.

“It’s not a big surprise given the very favorable arbitrage opportunity last month, but I think it’s still too soon to determine if China’s demand will be robust this year,” Wu Jianjian, an analyst at Yongan Futures Co., said from Zhejiang.

Falling Inventories

Inventories of copper in London Metal Exchange warehouses dropped for a fifth day yesterday to 538,875 metric tons, the longest period of declines since July. Stockpiles in Shanghai fell from the highest level in more than seven years last week.

“Stockpiles at the London Metal Exchange registered outflows across the board, which we interpret as a sign of improving demand conditions in industrialized economies,” said Credit Suisse’s Graber. “This trend is likely to extend as we expect the global economy to continue its gradual recovery.”

Among other LME metals, lead rose 0.9 percent to $2,256 a ton, nickel gained 0.2 percent to $22,300 a ton, and tin added 0.3 percent to $17,600 a ton. Aluminum was little changed at $2,257 a ton, while zinc was unchanged at $2,375 a ton at 3:50 p.m. in Singapore.

(From Bloomberg)