Copper Rises in London, Boosted by Dollar, Interest From China

By Chanyaporn Chanjaroen

Aug. 21 (Bloomberg) -- Copper rose in London, buoyed by a weaker dollar and signs that China, the world's largest user of the metal, may increase purchases. Tin and lead also increased.

Copper stockpiles earmarked for delivery out of London Metal Exchange-registered warehouses in South Korea, next to China, more than tripled to 9,025 metric tons, the exchange said today. The dollar weakened against the yen and the euro, making commodities cheaper for holders of other currencies. Gold, oil also gained.

``There's a growing feeling that the Chinese are ready to enter the market,'' Daniel Hynes, an analyst at Merrill Lynch & Co., said today by phone. A jump in canceled stockpiles ``certainly is showing that demand is going to pick up.''

Copper for delivery in three months advanced $255, or 3.4 percent, to $7,770 a ton as of 1:35 p.m. local time, paring this quarter's loss to 8.7 percent.

Copper remains in a seventh consecutive annual rally that has encouraged mining companies to boost production. Metorex Ltd., a Johannesburg-based producer of the metal in Africa, will spend as much as $400 million by 2012 to expand output as much as fivefold.

Prices have also been boosted by supply disruptions from Asia to Latin America, which limited mine production growth.

``The supply picture has become worse since 2007 because of massive disruptions,'' Hynes said.

The LME index of 6 industrial metals has lost 11 percent since the end of June on concern that weakening economies in Europe and the U.S. will trim demand for metals. Price declines in nickel, zinc and tin obliged producers to limit or curb output.

Mine Life

Indonesia plans to cap production of five minerals, including tin, to extend mine life and try to control prices, a government official said.

The government will limit output of tin at 90,000 tons a year from this year, Bambang Setiawan, director general of coal and mineral resources, said in an interview in Pangkalpinang, Indonesia. He didn't provide details on output plans for copper, gold, nickel and iron ore.

The tumble in commodities from records represents a temporary reverse in a long-term rally, according to investor Jim Rogers. The UBS Constant Maturity Commodity Index, comprising 26 raw materials, has fallen 14 percent since peaking in early July.

Rising Market

``I don't see that it's the end of the bull market,'' the chairman of Rogers Holdings, said in an interview in Bangkok before speaking at an investor conference later today. ``Until either a lot of supply comes on stream or the economy collapses, the bull market will continue.''

Rogers correctly predicted in April 2006 that oil would reach $100 a barrel and gold $1,000 an ounce.

Tin jumped $750, or 3.7 percent, to $21,250 a ton. Nickel rose $275, or 1.4 percent, to $20,200 a ton.

Among other metals traded on the LME, aluminum added $32 to $2,795 a ton, lead advanced $100 to $1,870 and zinc climbed $72 to $1,822 a ton.

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