Lead Rises to 3-Week High in London on China Demand Speculation

By Chanyaporn Chanjaroen

Aug. 28 (Bloomberg) -- Lead rose to the highest in three weeks in London on speculation demand improved in China, the world's largest consumer and producer of the metal.

Stockpiles monitored by the London Metal Exchange have fallen 18 percent since the end of June, mostly in Singapore, the nearest lead warehouse location to China. The amount of metal earmarked for withdrawal jumped 29 percent today, according to exchange data.

``It remains a speculative bullishness,'' said Neil Hawkes, a lead analyst at London-based researcher CRU. ``I'd rather wait to see the data for September and October, when the demand picture becomes clearer after summer.''

The contract for delivery in three months advanced $30, or 1.5 percent, to $2,080 a ton as of 11:21 a.m. local time. Earlier it traded at $2,125 a ton, the highest intraday price since Aug. 7.

China became a net importer in July, indicating demand for the metal in the domestic market. Refined lead imports rose 137 percent last month from a year ago, according to Aug. 22 customs data. Lead is mostly used in car batteries.

The demand outlook for the year remains weak because of lower vehicle sales in Europe and the U.S., Hawkes said. U.S. sales of cars and light trucks tumbled 13 percent in July and, according to a Deutsche Bank report, may be headed for a 15-year low.

Copper Shipments

LME-tracked copper inventories rose 2,200 tons, or 1.3 percent, to 170,050 tons, the highest since Feb. 6, according to the exchange's daily report. Including those monitored by the commodity exchanges in Shanghai and New York, stockpiles total 196,736 tons, or 3.8 days of global consumption. Last year's average was 4.9 days.

Copper fell $105, or 1.4 percent, to $7,545 a ton.

There's speculation that copper stockpiles in Shanghai will rise as about 6,000 tons of the metal may have arrived in the city, according to RBC Capital Markets. Two shipments arrive in China every month as part of a term contract from Chile, the world's largest producer of the metal, RBC said today in a daily report.

Any new imports apart from regular shipments are likely to be for consumption, the brokerage said.

Shanxi Taigang Stainless Steel Co., China's biggest maker of the rust-assistant alloy, said demand of its products has weakened, partly contributing to a 3 percent decline in its first-half profit. Nickel is a key ingredient in stainless-steel production.

Nickel has lost 23 percent this year. Glencore International AG, the world's largest commodity-trading company, said today operating income in its minerals and metals division dropped 28 percent to $2.3 billion in the first half, because of lower nickel and zinc prices.

Nickel dropped $700, or 3.3 percent, to $20,300 a ton. Zinc declined $42, or 2.3 percent, to $1,807 a ton, taking this year's loss to 24 percent.

Among other metals traded on the LME, aluminum lost $6 to $2,759 a ton and tin fell $300 to $20,200.

-- With reporting by Helen Yuan and Li Xiaowei in Shanghai. Editors: James Ludden, Stuart Wallace.

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