Copper May Advance on Acceleration in Chinese Manufacturing

LONDON, Nov. 3 -- Copper, little changed in New York and London today, may rise after manufacturing expanded at the fastest pace in 18 months in China, the world's biggest consumer of the metal.

    An HSBC Holdings Plc purchasing managers' index of Chinese manufacturing rose to a seasonally adjusted 55.4 from 55 in September. A separate government gauge released yesterday also climbed. The U.S. Institute for Supply Management may say today its manufacturing index advanced in October to the highest level in three years, according to a Bloomberg News survey.

    "There will be a lot of focus on the ISM manufacturing," Daniel Brebner, an analyst at Deutsche Bank AG in London, said by phone. The Chinese data "all look quite positive. It will support."

    December-delivery copper slipped 0.05 cent to $2.955 a pound on the New York Mercantile Exchange's Comex unit at 8:21 a.m. local time. Prices have dropped 3.7 percent from a 13-month intraday high of $3.069 on Oct. 26. Copper for three-month delivery added 0.1 percent to $6,485 a metric ton on the London Metal Exchange.

    Prices rose as much as 1.1 percent in New York as the dollar weakened, making metals denominated in the currency cheaper for holders of other monies. The Dollar Index, a six- currency gauge of the greenback's performance, fell as much as 0.3 percent.

    Stimulus Removal

    China's government is spending $586 billion to stimulate the local economy, helping to drive copper imports to record levels in 2009's first half and prices to double. Concern is increasing about "the impact of a gradual removal of government stimuli" in the country, Michael Widmer, an analyst at BofA Merrill Lynch Global Research, wrote in a report on Oct. 30.

    "Tighter monetary and fiscal policies are certainly not bullish, but may be partially offset by a rebound in exports and higher metals demand in world ex-China," Widmer wrote.

    The ISM manufacturing index rose to 53 last month, according to the median forecast of 62 economists surveyed by Bloomberg News. The figures are due at 10 a.m. in Washington.

    Among other LME metals for three-month delivery, zinc gained 0.7 percent to $2,176 a ton. It has increased 16 percent over the past month, the most among the six main industrial metals traded on the LME.

    Speculation is that a smaller commodity index fund has made a "favorable move in terms of zinc allocation," David Wilson, an analyst at Societe Generale SA in London, said in a report dated Oct. 30. "It is difficult to see that the recent upward moves in zinc prices can be maintained into November in the face of lackluster demand."

    Aluminum slipped 0.2 percent to $1,905 a ton, and lead lost 1.3 percent to $2,275 a ton. Tin fell 0.5 percent to $14,630 a ton, while nickel slid 0.9 percent to $18,080 a ton.

    (Source: Bloomberg)