Farallon Resources Ltd. (fka FRLIF)

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Zinc dips, Copper Climbs for a Third Day in Asia as Inventories Continue to Contract
By Glenys Sim - Jul 21, 2010

Copper climbed for a third day in Asia as inventories extended their declines, fueling expectations that demand remains robust.

Copper for three-month delivery on the London Metal Exchange gained as much as 0.8 percent to $6,695.50 a metric ton, and traded at $6,670 at 3:22 p.m. in Singapore. October copper on the Shanghai Futures Exchange rose as much as 1 percent to 53,600 yuan ($7,908) a ton, before ending at 53,350 yuan.

Copper stockpiles in LME warehouses fell yesterday for the 23rd day, the longest slump in more than a year. Stockpiles tallied by the LME stood at 419,600 tons, the lowest level since Nov. 18, down 16 percent this year.

“The continued decline in inventories provides a supportive background,” Zhao Kai, an analyst at Jinrui Futures Co., said from Shenzhen. “Everyone’s expecting the global economy to slow in the second half of this year, however, slow growth doesn’t mean no growth.”

The metal used in electrical wiring and pipes rose as much as 2.5 percent yesterday, the most in two weeks, after U.S. building permits increased for the first time since March. The U.S. is the second-largest copper consumer after China, and builders are the biggest users of the metal.

“The increasing correlation between prices and inventory developments indicates that fundamentals specific to base metals are coming back into focus,” Stefan Graber, an analyst at Credit Suisse Group AG in Singapore, wrote in a note today. “The longer-term outlook remains positive.”

Copper Shipments

China’s refined-copper imports fell for a third month in June to 211,957 tons as lower domestic prices discouraged purchases and local output surged, the customs office said today. That’s 24 percent less than in May and 44 percent less than a year earlier, according to Bloomberg calculations.

Futures in China, which include a 17 percent value-added tax and import fees, traded at a discount to London contracts in June, after losing 4.3 percent compared with 3.5 percent in Shanghai. Domestic output of the refined metal rose to a record last month, offsetting the drop in imports amid steady demand.

“The market was expecting the decline in the refined numbers because of the negative arbitrage last month,” said Li Ye, an analyst at Minmetals Starfutures Co. “Domestic users are also trying to work off the metal already in the country rather than import more, judging from the recent fall in stockpiles.”

Inventories monitored by the Shanghai Futures Exchange dropped for a second month, by 21 percent in June, the biggest monthly decline since April 2009.

Aluminum in London rose 0.4 percent to $1,978 a ton, while nickel climbed 0.2 percent to $19,155 a ton. Zinc fell 0.6 percent to $1,863 a ton, lead dropped 0.7 percent to $1,826 a ton, and tin was unchanged at $18,240 a ton at 3:09 p.m. in Singapore.

http://www.bloomberg.com/news/2010-07-21/copper-gains-for-third-day-as-stockpiles-decline-to-lowest-since-november.html