Copper Gains on Speculation U.S. Senate to Approve Rescue Plan

By Glenys Sim

Oct. 1 (Bloomberg) -- Copper climbed in Asia, rebounding from its biggest quarterly drop in more than two decades, amid speculation the U.S. Senate will approve a $700 billion bank- rescue package that may avert an economic slowdown.

The metal dropped 25 percent in the past quarter on concern that weakening global economies will curb demand. Prices fell even as stockpiles monitored by London Metal Exchange warehouses dropped a seventh day to 198,600 metric tons yesterday. Reserves in Shanghai warehouses fell 5.5 percent to 16,130 tons last week.

``Copper prices are surprisingly firm in the face of the global credit crisis,'' Salman Partners Inc.'s senior mining analysts Haytham Hodaly and Raymond Goldie said in a report. ``With global demand falling off after the current round of restocking is over, we anticipate that there could be a surplus of copper by the end of this year.''

London Metal Exchange copper for delivery in three months rose as much as 1.9 percent to $6,478 and traded at $6,434 at 1:32 p.m. in Singapore. December delivery copper on the Comex division of the New York Mercantile Exchange added 0.6 percent to $2.8965 a pound at the same time. China's markets are closed for a week-long holiday.

Workers at the Kidd copper plant owned by Xstrata Plc, the world's fourth-largest copper producer, will strike after talks between a labor union and the company failed to reach an accord, according to a union statement today. Copper surged to a record $8,940 a metric ton in July, partly on supply disruptions.

Forecast Cut

Salman Partners expects copper to average $3.55 a pound ($7,827.75 a ton) this year, down from an earlier estimate of $3.78 a pound. Prices may fall to $3.28 in 2009, down from a previous forecast of $3.72, it said. The metal used in wires and pipes has averaged $7,868.43 so far this year.

Copper also gained today as a rally in the dollar paused, raising the appeal of commodities priced in the currency. The dollar index, a weighted measure against six major currencies including the euro, fell for the first time in three days.

Among other LME-traded metals, aluminum rose 0.8 percent to $2,444 a ton, zinc added 0.5 percent to $1,689, and lead gained 0.6 percent to $1,840 as of 1:37 p.m. in Singapore. Nickel and tin had not traded.

To contact the reporter for this story: Glenys Sim in Singapore at gsim4@bloomberg.net