Copper Rises in London as China, Biggest User, Increases Buying

By Chanyaporn Chanjaroen

Aug. 18 (Bloomberg) -- Copper rose for the first time in three days in London as consumers in China, the world's largest user, bought the metal following a 20 percent drop in prices. Lead and tin also gained.

London Metal Exchange copper prices have become cheaper than those in Shanghai after a 17 percent local tax and freight costs, according to Triland Metals Ltd., one of the 12 companies that trade on the LME floor.

``There is a big appetite for LME copper,'' Eric Yan, head of Triland's China desk, said today by phone. Buying interest from Chinese customers is likely to keep prices above $7,200 a metric ton, he said.

Copper for delivery in three months rose $25, or 0.3 percent, to $7,385 a ton as of 1:20 p.m. on the LME. The contract lost 0.5 percent last week, a seventh consecutive decline, and had fallen 20 percent from last month's all-time high of $8,940 a ton.

Copper is in its seventh year of advances, boosting profits at mining companies including BHP Billiton Ltd., the world's largest. The Melbourne-based company today reported a 30 percent increase in second-half net income.

``In the short term, we expect prices to remain high relative to historical levels, albeit with higher volatility,'' BHP Billiton said in a statement today. ``Looking to the longer term, demand for our commodities is expected to remain strong.''

Lead gained $25, or 1.5 percent, to $1,695 a ton on indications that stockpiles of the metal will decline further, crimping supply. The contract has lost 34 percent this year, the biggest drop on the LME.

Lead inventories earmarked for withdrawal from warehouses registered with the LME jumped 27 percent to 12,800 tons, the exchange reported today. That accounted for 14 percent of total stockpiles.

Among other metals traded on the LME, aluminum lost $5 to $2,775 a ton and nickel fell $450, or 2.4 percent, to $18,250 a ton and tin gained $400, or 2.1 percent, to $19,100. Zinc declined $29 to $1,646.

To contact the reporter on this story: Chanyaporn Chanjaroen in London at cchanjaroen@bloomberg.net