Copper Gains From Seven-Month Low on China Import Speculation

By Li Xiaowei

Sept. 11 (Bloomberg) -- Copper rebounded from its lowest in more than seven months in London on speculation imports from China, the largest consumer, will gain on stronger local prices.

The plunge in prices in London has led to a large premium for metal in Shanghai since the end of August, which ``will encourage Chinese copper imports to recover substantially in the fourth quarter,'' Macquarie Group Ltd. said in a report today.

``The consensus that Chinese imports will gain is supporting the market,'' Chen Yonglin, an analyst at Citic Futures Co., said from Shanghai. Refined metal purchases are ``very likely to return to normal levels of 100,000 tons'' in September, he said.

Copper for three-month delivery advanced as much as 1.5 percent to $6,940 a ton on the London Metal Exchange and traded at $6,921 at 11:21 a.m. in Shanghai. Metal for December delivery was up 0.6 percent at 54,600 yuan ($7,976) a ton on the Shanghai Futures Exchange.

Freeport McMoRan Copper & Gold Inc., the second-largest copper producer, said supply globally may be constrained because of a lack of new discoveries and declining output at ageing mines.

``We feel very optimistic about the markets,'' Chief Executive Officer Richard Adkerson said in an interview in Denver. ``We see current output from mines being consistently lower than expected, not for one reason but for a variety of issues.''

Freeport, based in Phoenix, this week lowered the production forecast from its Grasberg mine in Indonesia after a pit wall collapsed, while BHP Billiton Ltd. said its Escondida copper mine, the world's largest, will yield 15 percent less metal as ore quality declines.

China Premium

Chinese copper for immediate delivery trades at a premium of $360 a ton above LME cash copper, compared with an $800 discount in May, Macquarie analysts led by Bonnie Liu said in the report.

Copper has fallen 23 percent from the July peak of $8,940 a ton in London, as increasing stockpiles signaled weaker demand and a rebound in the U.S. currency reduced dollar-priced investments. Shanghai prices have declined 13 percent.

Imports of copper and copper products by China fell 4 percent to 178,047 tons last month from July, preliminary data from the country's customs office showed yesterday.

Among LME-traded metals, aluminum fell 0.2 percent to $2,620 a ton, lead declined 1 percent to $1,780 a ton, nickel was unchanged at $18,500, and zinc dropped 0.8 percent to $1,735.

To contact the reporter for this story: Li Xiaowei in Shanghai at Xli12@bloomberg.net