Copper, Zinc Surge Limit in Shanghai After Holiday on Outlook

BEIJING, May 4 -- Copper and zinc futures climbed by the exchange-imposed 6 percent daily limit in Shanghai, tracking moves in London, on an improved demand outlook.

    Copper in London rose on May 1, adding to its longest monthly winning streak in three years. Inventories monitored by the exchange dropped for a 15th day, the longest slide since February 2008. Stockpiles held in Singapore and South Korea, the closest locations to China, were the lowest since 2005.

    "The decline in LME stockpiles is not necessarily a reflection of actual consumption in China, " Wang Xiaoli, an analyst at Goldbull Futures Co., said from Shenzhen. "

    It does indicate that with a favorable arbitrage in place, Chinese consumers are still buying because they think demand is there."Copper for August delivery on the Shanghai Futures Exchange rose 2,140 yuan from the previous settlement price to 37,860 yuan ($5,548) a metric ton.

    August-delivery zinc gained as much as 745 yuan to 13,210 yuan a ton. Shanghai's markets were closed May 1 for a holiday.

    London copper rose 3.8 percent to $4,600 a ton on Friday and zinc and gained 6.3 percent $1,515 a ton. The London Metal Exchange is closed for a holiday today.

    Still, copper may decline this week on speculation that the 45 percent rebound this year is counter to expectations for weaker demand. Ten of 16 analysts, investors and traders surveyed by Bloomberg, or 63 percent, said copper would drop. Six predicted gains for the metal, viewed by some as a growth indicator because of its use in construction and automobiles.

    China's Purchasing Manager's Index climbed for a second straight month to 53.5 in April, the Federation of Logistics and Purchasing said May 1. A reading above 50 indicates growth. U.S. manufacturing contracted less than forecast last month and consumer sentiment improved by the most in more than two years. China and the U.S. are the world's two largest users of copper.

    (Source: Bloomberg)