Farallon Resources Ltd. (fka FRLIF)

[the cork]

Lead up, Zinc gains, Copper Advances for Second Day in New York Before U.S. Production Figures

By Anna Stablum - Aug 17, 2010 4:57 AM PT

Copper rose for a second day in New York and London before reports that may show stronger industrial production and housing starts in the U.S., the world’s second- biggest consumer of the metal.

Output increased 0.5 percent in July, according to the median estimate of 73 economists surveyed by Bloomberg News. A separate report may show work began on more houses for the first time since April. Prices also gained as the U.S. Dollar Index, which measures the currency’s strength against six monies, fell for a second day.

“The greenback is correcting lower, so we are seeing a rebound across the whole complex,” Andrey Kryuchenkov, an analyst at VTB Capital in London, said today. “The housing data is certainly important.”

Futures for December delivery climbed 4.5 cents, or 1.4 percent, to $3.3455 a pound at 7:40 a.m. on the Comex in New York. Copper for delivery in three months rose 1.4 percent to $7,350 a metric ton on the London Metal Exchange. All of the six main metals traded on the LME advanced, led by zinc.

The Federal Reserve’s industrial-production figures are due at 9:15 a.m. in Washington. Commerce Department figures to be released 45 minutes earlier may show housing starts climbed to a 560,000 annual rate last month from June’s 549,000 pace, the lowest in eight months, according to the median estimate in a Bloomberg survey.

Chinese Economy

Construction accounts for a quarter of copper demand, according to the Copper Development Association.

In China, the leading economic index climbed 0.8 percent to 147.0 in June after a revised 0.9 percent gain in May, a report from the New York-based Conference Board showed today. China, the largest copper consumer, overtook Japan to become the world’s second-biggest economy in the second quarter, Japanese data showed yesterday.

Investor confidence slumped in Germany, the third-largest copper consumer. The ZEW Center for European Economic Research said today its index of investor and analyst expectations, which aims to predict developments six months ahead, fell to 14 from 21.2 in July, its fourth straight decline. Economists surveyed by Bloomberg predicted a reading of 20.

The dollar index dropped as much as 0.6 percent. A weaker dollar makes metals priced in the currency cheaper in terms of other monies.

Inventories Decline

Copper stockpiles tracked by the LME shrank for a third day to 405,025 tons, the lowest level since Nov. 13, according to daily exchange figures. They are down 2.1 percent this month after sliding 8.3 percent in July, the most since June 2009. Stocks have fallen 19 percent this year, on course for the first annual drop since 2004.

Canceled warrants, or orders to draw copper from inventories, rose 12 percent after yesterday’s 20 percent jump, the biggest in more than two months. Today canceled warrants advanced to 27,350 tons, the highest level since Aug. 5.

Tin for three-month delivery on the LME gained 2 percent to $21,525 a ton after reaching $21,650, the highest intraday price since Aug. 22, 2008. Inventories in LME-monitored warehouses rose for a second day to 14,065 tons. One party held between 40 percent and 49 percent of available LME stockpiles on Aug. 13, down from 50 percent to 79 percent in the prior session, according to the latest exchange data.

Aluminum climbed 0.9 percent to $2,138 a ton. The contango, cash metal’s discount to the three-month contract, widened to $9 a ton yesterday from the prior session’s $4.50, the narrowest level since March 2007, according to LME data.

Nickel rose 1.9 percent to $21,950 a ton and zinc gained 2.3 percent to $2,120 a ton. Lead advanced 1.9 percent to $2,135 a ton.

http://www.bloomberg.com/news/2010-08-17/copper-rises-for-second-day-before-u-s-production-housing-starts-reports.html