Copper Rallies From Three-Year Low as Asian Stocks Advance

By Li Xiaowei

Oct. 20 (Bloomberg) -- Copper rose for a second day to extend a climb from the lowest in almost three years, as Asian stocks advanced on government support polices, easing concern for a global economic slowdown.

Asian stocks rose after South Korea yesterday announced Asia's biggest financial rescue package. China's stocks gained today on speculation the government will accelerate efforts to bolster the world's fourth-largest economy.

``The stock market gain has boosted sentiment,'' Wang Lei, an analyst at Haitong Futures Co., said in an e-mailed report today. ``However, the rebound in copper is likely to be short- lived as the metal's fundamentals are turning bearish.''

Copper for three-month delivery rose as much as 2.9 percent to $4,950 a metric ton on the London Metal Exchange and traded at $4,940 at 2:20 p.m. in Shanghai. Futures fell to as low as $4,545 last week, the lowest intra-day level since January 2006.


Copper for January delivery rose 3.9 percent to 39,150 yuan ($5,732) a ton in Shanghai. It dropped to 37,610 yuan on Oct. 17, the lowest for the front-month contract since 2005.

China's copper and aluminum production slid 1 and 3 percent respectively in September from a month ago, data from the statistics bureau showed today.

Real Economy

The country's economic expansion cooled in the third quarter to 9 percent, the slowest pace in five years, underscoring concern that the global financial crisis may threaten the biggest contributor to global growth.

``Copper hasn't yet factored in all the impact of the credit crisis on the real economy,'' Chen Yonglin, an analyst at Citic Futures Co., said from Shanghai. ``Chinese demand isn't going to stay intact against the global backdrop.''

September factory production in China, the world's largest user of industrial metals, rose 11.4 percent from a year earlier, less than the 13.4 percent expected by economists. Housing starts in the U.S., the largest copper consumer after China, dropped last month more than economists forecast.

Among other LME-traded metals, aluminum gained 0.9 percent to $2,224.50 a ton, zinc jumped 4.7 percent to $1,288, lead rose 3.8 percent to $1,494.75, nickel was down 1.4 percent to $10,650 and tin advanced 2.3 percent to $13,300.

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