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Copper Pares Advance as Rally Spurs Sales, Aluminum Declines
Jan 7,2010 14:46CST
industry news

SINGAPORE, Jan. 7 -- Copper erased gains after rising to the highest price in more than 16 months, after some investors sold the metal on speculation that recent increases were not justified by the outlook for demand. Aluminum and zinc dropped, reversing earlier advances.

The metal used in construction and automobiles climbed to $7,796 a metric ton in early trade, the highest price since Aug. 22, 2008. Copper rose as much as 3.4 percent yesterday, the biggest gain since Nov. 16, 2009, on speculation demand will increase as the global economy recovers.

"When you get this kind of meteoric rise in prices, the pullback is expected to be just as sudden and dramatic," Li Rong, chief analyst at Great Wall Futures Co., said from Shanghai. "Even with better fundamentals, these price levels just aren't justified."

Copper for delivery in three months on the London Metal Exchange traded unchanged at $7,660 a ton at 11:19 a.m. in Singapore, after gaining as much as 1.8 percent and losing as much as 0.3 percent.

April-delivery copper on the Shanghai Futures Exchange rose 0.9 percent to 61,920 yuan ($9,069) a ton, after reaching 63,450 yuan earlier, the highest level since July 4, 2008. March-delivery copper was little changed at $3.4965 a pound on the Comex division of the New York Mercantile Exchange, after climbing to $3.5440, the highest price since Aug. 22, 2008.

The worst postwar recession boosted London Metal Exchange copper stockpiles by nearly half last year. Inventories expanded for a 44th day yesterday to 507,400 metric tons, a level not seen since March 2009. A resumption of mining activities at Codelco's Chuquicamata mine in Chile, the world's largest Copper-producing country, after striking workers accepted a pay offer eased concerns about a tightening of supplies.

Among other LME-traded metals, aluminum fell 1 percent to $2,355 a ton, zinc dropped 1.6 percent to $2,675 a ton and lead lost 2.9 percent to $2,603 a ton. Nickel lost 0.5 percent to $19,060 a ton, while tin slid 1.8 percent to $17,500 a ton by 10:58 a.m. in Singapore.



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