Copper Rises in London on Dollar’s Decline; Aluminum Pares Gain

By Claudia Carpenter

Dec. 10 (Bloomberg) -- Copper rose in London on expectations a drop in the dollar will boost demand for industrial metals priced in the currency. Aluminum pared a gain and zinc fell.

The dollar fell against a basket of six currencies including the pound and euro. The UBS Bloomberg CMCI Index of 26 commodities has declined 37 percent this year, while the dollar has climbed 13 percent against the euro.

“A weaker dollar helps a little bit,” said Andrew Montgomery, U.K. manager of Concorde Metals Recycling Ltd., a Coatbridge, Scotland-based processor and exporter of scrap metals.

Copper for delivery in three months rose $28, or 0.9 percent, to $3,228 a metric ton by 1:29 p.m. on the London Metal Exchange. The benchmark contract has dropped 64 percent from a record $8,940 a ton in July.

U.S. stock-index futures climbed on speculation lawmakers will approve a $15 billion automaker bailout, the latest effort to revive the economy, adding to prospects declines in metal prices will slow. At least “demand won’t go to zero,” said Tim Mercer, chief investment manager at Hong Kong-based hedge fund Musashi Capital Ltd.

Copper prices in Shanghai gained for the first day since Nov. 27, increasing 1.5 percent on speculation lower interest rates will help revive growth in China, the world’s largest user of copper.

China Demand

Buying interest from China has picked up in the past two or three weeks after being absent since October, according to Montgomery, who has followed the industry for two decades.

Copper inventories rose 1,025 tons to 303,600 tons, the most since February 2004. Of the increase, 87 percent was in the U.S., the second-biggest buyer of copper. LME-monitored inventories scheduled for withdrawal, known as canceled warrants, increased 1,150 tons to 5,175 tons, signaling supplies may be reduced.

Tin gained $75 to $11,875 a ton. Yunnan Tin Co., the world’s biggest producer of the metal, said yesterday it was suspending output for at least a month. It’s “probably a reflection of weak demand in China,” Peter Kettle, research manager at St. Albans, U.K.-based producer group ITRI Ltd., wrote in an e-mail today.

Aluminum was unchanged at $1,512 a ton, after trading up as much as $34. Norsk Hydro ASA, Europe’s second-largest aluminum producer, will close 120,000 tons of annual production at its Karmoy smelter in Norway. Output will halt by the end of the first quarter, Oslo-based Hydro said.

“Western producers are having to step up now that China has signaled it won’t be cutting in a hurry,” said David Thurtell, an analyst at Citigroup Inc. in London. China may end a tax on primary aluminum so producers can boost sales overseas, said traders and analysts.

Nickel rose $176 to $9,576 a ton and lead jumped $25 to $995 a ton. Zinc dropped $5 to $1,110 a ton.

To contact the reporter on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net or ccarpenter2@bloomberg.net