Copper Rises From Two-Week Low Before U.S. Leading Indicators

By Anna Stablum

Aug. 20 (Bloomberg) -- Copper rose from a two-week low in New York and London on expectations that U.S. leading economic indicators probably rose for a fourth month, signaling the worst recession since World War II is easing.

The U.S. is the second-largest copper consumer after China and the Conference Board’s gauge of the economic outlook for the next three to six months probably advanced 0.7 percent, according to the median forecast of 52 economists surveyed by Bloomberg. The data is scheduled for 3 p.m. London time.

“The data that is coming out is positive but it is positive in so far as the recovery will start to take place, not that it has started to take place,” Steve Hardcastle, an analyst at Sucden Financial Ltd. in London, said by phone.

Copper for December delivery rose 0.4 percent to $2.781 a pound by 7:56 a.m. on the New York Mercantile Exchange’s Comex. The metal yesterday fell as much as 4.1 percent to $2.66, the lowest intraday price since Aug. 3. Copper for three-month delivery rose $110, or 1.8 percent, to $6,090 a metric ton on the London Metal Exchange.

Copper erased some gains after the Labor Department reported that more Americans unexpectedly filed claims for jobless benefits last week. Applications rose to 576,000 in the week ended Aug. 15 from a revised 561,000 the week before, the Labor Department said today.

The price of copper, used in plumbing and electrical wiring, has almost doubled this year as imports by China more than doubled in the first half. July imports shrank 15 percent from a month earlier, the Beijing-based customs office said.

‘More Subdued’

“With Chinese demand more subdued, we would expect prices to retrace in the short term by around 10 percent,” Investec Asset Management said in a report today. Copper will average $5,000 this year, rising to $5,400 in 2010, Investec said.

Among other LME metals for three-month delivery, aluminum fell 0.8 percent to $1,935 a ton.

“We have been seeing a tightening of market conditions,” Tom Albanese, Rio Tinto Group’s chief executive officer, said in a conference call today. LME-monitored inventories are at a record 4.63 million tons.

“A lot of the inventories are being tied up in financing deals so are not actually available to the market,” Albanese said.

Global aluminum production averaged 98,200 tons a day in July, from 97,600 tons a month earlier, the International Aluminum Institute said today.

In Japan, premiums paid to suppliers may rise to the highest in 14 years in the fourth quarter as reduced shipments from Russia and increased purchases by China boost prices.

The fee may climb to more than $100 a ton over aluminum for immediate delivery, said four executives, representing smelters and buyers. The figure is up from $75 a ton this quarter.

Nickel was up 2 percent at $19,235 a ton. Tin rose 3.2 percent to $14,000 a ton, zinc gained 1.7 percent to $1,839.5 and lead advanced 2.1 percent to $1,850 a ton.

The LME said trading in steel billet reached $1 billion since the contract was introduced in February last year.

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