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Copper Advances to 10-Month High on Improving Economic Outlook

By Glenys Sim

July 27 (Bloomberg) -- Copper jumped to the highest price in almost 10 months in London, New York and Shanghai on optimism a global economic recovery will boost demand for the metal used in construction and automobiles.

Copper has led an advance in industrial metals this year, gaining 83 percent on the London Metal Exchange as stimulus plans by governments including the U.S. and China spurred raw- material purchases.

“There’s so much optimism floating around about economic recovery and investors have very little interest in stopping the current rally,” said Pan Jinghua, analyst at Shanghai Jinpeng International Futures Co.

Three-month delivery copper in London added as much as 2.2 percent to $5,641 a metric ton, the highest since Oct. 8, and traded at $5,610 at 3:55 p.m. in Singapore. Copper for September delivery in New York gained as much as 2.3 percent to $2.5790 a pound, the highest for a most-active contract since Oct. 7.

The U.S. economy probably shrank at a 1.5 percent pace in the second quarter, following a 5.5 percent drop in the first three months of 2009, according to the median forecast of 66 economists surveyed by Bloomberg, helping extend an advance in global equities. The regional benchmark MSCI Asia Pacific Index gained for a 10th day, heading for its longest winning streak since 2004.

Copper is often used as an indicator for the world economy and may set the pace for other base metals because more than 50 pounds (23 kilograms) of copper is used in an average car and an average of 439 pounds is used in a 2,100-square-foot (195 square meter) home, according to the New York-based Copper Development Association.

China Metals

Copper for November delivery on the Shanghai Futures Exchange gained as much as 2.9 percent to 44,980 yuan ($6,584) a ton, the highest since Oct. 8, and ended the day at 44,930 yuan.

November-delivery aluminum in Shanghai gained 4.4 percent to 14,865 yuan a ton, the highest since Oct. 6, while zinc for November delivery added as much as 3 percent to 14,585 yuan a ton, the highest since Aug. 22, and closed at 14,565 yuan.

“The funds just keep pouring money into the market as investors are encouraged by the steps the Chinese government is taking to revive the economy and the continued commitment to growth,” Zeng Chao, analyst at Everbright Futures Co., said from Shanghai today.

China’s central bank affirmed a “moderately loose” monetary policy Friday, easing concern surging loans and asset prices will lead to fiscal tightening.

Bank Loans

Chinese banks extended a record 7.37 trillion yuan of new loans in the first half, triple the amount offered in the same period a year ago, triggering a 7.9 percent expansion in GDP in the second quarter as the government encouraged banks to support the economy.

The increase in loans spurred demand for properties, helping home prices in 70 major Chinese cities rise for the first time in seven months in June. China’s passenger-vehicle sales rose 48 percent in June, the most since February 2006.

Among other LME-traded metals, aluminum rose as high as $1,844 a ton, the highest since Nov. 20, zinc gained to $1,727 a ton, the highest since Sept. 29, and nickel climbed to $17,000 a ton, the highest since Sept. 29.

Lead rose to $1,804.75 a ton, the highest since June 12, and tin advanced to $14,900 a ton, the highest since July 1.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=adkyKVjJpsX0