July 23 (Bloomberg) -- Copper headed for its best week in five months as the outlook for demand improved following a continued decline in inventories. Futures in Shanghai jumped to an eight-week high.
Copper for three-month delivery on the London Metal Exchange pared an early loss of as much as 1 percent to trade 0.4 percent lower at $6,982 a metric ton at 10:02 a.m. in Singapore. The metal used in construction and wiring surged to $7,050 a ton yesterday, a level not seen since May 28.
Copper has advanced 7.7 percent this week, the biggest gain since the week to Feb. 19, as stockpiles in LME warehouses fell yesterday for the 24th day to 416,525 tons, the lowest since Nov. 18. The metal is set for its first monthly gain in four.
"After a period of heavy selling in the past few months, we're seeing a nice rebound as demand appears to be steady," Zhang Yu, an analyst at Yongan Futures Co., said from Zhejiang. "We see the upside being capped as physical buyers stay away from the market at these levels."
October copper on the Shanghai Futures Exchange jumped as much as 2.8 percent to 55,460 yuan ($8,183) a ton, the highest price since May 31, before trading at 55,210 yuan. The contract is set for its best week in a month.
Reports this week showed sales of previously owned U.S. homes fell less than forecast in June, while U.S. building permits increased for the first time since March, boosting demand prospects. The U.S. is the second-largest copper consumer after China, and builders are the biggest users of the metal.
Aluminum in London fell 0.7 percent to $2,030 a ton, zinc dropped 1.5 percent to $1,920 a ton, and lead declined 1.2 percent to $1,916.25 a ton. Nickel gained 0.2 percent to $20,300 a ton, while tin hadn't traded.