Copper Gains for Second Day in N.Y. on Chinese Demand Outlook

By Millie Munshi

Aug. 20 (Bloomberg) -- Copper rose for a second day on speculation demand may gain in China, the world's biggest metals buyer.

China's manufacturers, the world's largest copper consumers, may increase imports by about 60 percent, a trader at Bayin Resources Co. said today from Shanghai. The price of the metal has quadrupled since 2003 as miners struggled to keep up with rising demand from the Asian country.

``Watch out for a sharp pick-up in demand'' from China, Alex Heath, the head of base metals trading at RBC Capital Markets in London, said today in a report. ``If we are right, then the fourth quarter could very well see continued recoveries in price for the likes of copper.''

Copper futures for December delivery rose 1 cent, or 0.3 percent, to $3.437 a pound at 9:11 a.m. on the Comex division of the New York Mercantile Exchange. A close at that price would leave the metal up 3.9 percent in the past two sessions, the biggest two-day advance since July 2.

Chinese imports of refined copper may jump to between 100,000 metric tons and 120,000 tons a month, said Frank Zhou, deputy manager of Bayin's copper division. Imports were 75,707 tons in June.

Copper's gains through 2010 will be ``aggressive'' as supplies are limited and demand remains strong in China, Citigroup Inc. analyst John H. Hill said in a report this week.

Still, a stronger dollar may reduce demand for commodities as a hedge against inflation and limit today's gains for copper, Heath of RBC said.

The U.S. currency gained as much as 0.6 percent against the euro today. The dollar has climbed more than 8 percent versus the euro in the past month, spurring a 6.7 percent drop in the copper price.

On the London Metal Exchange, copper for delivery in three months gained $54, or 0.7 percent, to $7,630 a metric ton ($3.46 a pound). Before today, the price rose 7.9 percent in the past 12 months.

To contact the reporter on this story: Millie Munshi in New York at mmunshi@bloomberg.net