Copper Advances for a Third Day in London on Economic Recovery

By Anna Stablum

Aug. 24 (Bloomberg) -- Copper rose for a third day and lead to the highest since September in London as U.S. Federal Reserve Chairman Ben Bernanke said the world is emerging from its deepest recession since the 1930s.

The MSCI World Index of stocks advanced for a fifth day after sales of existing homes in the U.S. surged by a record last week. The prospects for a return to growth “appear good,” Bernanke said at a meeting of the world’s central bankers in Jackson Hole, Wyoming, on Aug. 21.

“We had nothing negative out of Jackson Hole and the central bank meeting over the weekend and that would imply they are all in general agreement the worst is over,” Alex Heath, head of industrial-metals trading at RBC Capital Markets in London, said by phone today. “The market has taken into its head we are going to see a recovery in the fourth quarter.”

Copper for three-month delivery gained $100, or 1.6 percent, to $6,370 a metric ton by 9:55 a.m. on the London Metal Exchange, adding to six weeks of gains. The metal for December delivery advanced 0.7 percent to $2.9135 a pound on the New York Mercantile Exchange’s Comex division. Copper prices have doubled this year in London and New York.

Lead rose 5.7 percent to $1,970 a ton after earlier gaining as much as 7.3 percent to $1,999.50, the highest since Sept. 26.

“You are not going to find many of the other metals bucking the trend,” Heath said. “People look at them and think there is more value in the cheaper ones.”

Investment Community

European industrial orders increased more than economists forecast in June, according to a report today from the European Union’s statistics office in Luxembourg.

Hedge-fund managers and other large speculators decreased their net-short position, or a bet prices will fall, in New York copper by 88 percent in the week ended Aug. 18, according to U.S. Commodity Futures Trading Commission data.

Imports of refined copper from China more than doubled in the first half of this year. Imports dropped by 23 percent in July from a record the previous month, the Beijing-based customs office said today, citing revised final data.

“There was roughly 300,000-400,000 tons of stock built in China over the first half of 2009,” Max Layton, an analyst at Macquarie Bank Group Ltd. in London, said in a report today.

Global copper usage is up 4.1 percent over the first five months of the year from a year ago, he said. “The strength of Chinese apparent demand” had been enough to more than offset weak consumption in the 30 member countries of the Organization for Economic Co-operation and Development, Layton said.

In Chile, Codelco, the world’s largest copper producer, will close the smelter at its Chuquicamata mine by December because of high fuel costs, El Mercurio reported today.

Nickel Scrap Tightness

Among other LME metals for three-month delivery, nickel rose 3.1 percent to $19,890 a ton. The nickel market will be in a 29,000-ton deficit next year versus a 28,000-ton surplus this year, Michael Widmer, an analyst at Bank of America Securities- Merrill Lynch, wrote in a report on Aug. 21.

“We expect a pick-up in stainless steel end-user demand through 2010, which could push the nickel market into deficit,” he said. About two-thirds of all nickel produced is used to make stainless steel more durable. “Stainless steel scrap makes up almost half of the nickel units used by stainless steel mills.”

The tightness in the scrap market through to 2010 would force “stainless steel mills to use more refined nickel and ferronickel,” Widmer said.

Aluminum rose 0.5 percent to $1,937 a ton, zinc advanced 2.2 percent to $1,875 and tin gained 0.4 percent to $14,350.

To contact the reporter on this story: Anna Stablum in London at astablum@bloomberg.net