Copper Prices Climb to Two-Week High as Inventories Decline

LONDON, June 30 -- Copper prices rose to a two-week high as inventories dropped to the lowest since November, indicating sustained demand.

    Stockpiles monitored by the London Metal Exchange fell 1.1 percent today to 267,300 metric tons. Supplies dropped for the 37th straight session, the longest slide since April 2004. Inventories recorded by the Shanghai Futures Exchange tumbled 18 percent last week, the first drop since May. China is the world's largest user of copper, which has surged 65 percent this year.

    "The drawdown in stockpiles is one of the fundamentals supporting the market," said Michael Gross, a trader at OptionsSellers.com in Tampa, Florida.

    Copper futures for September delivery rose 1.7 cents, or 0.7 percent, to $2.326 a pound on the New York Mercantile Exchange's Comex division. Earlier, the metal reached $2.357, the highest for a most-active contract since June 15.

    Traders who follow historical price patterns bought copper, supporting the rally, Gross said. Concerns that demand may sink in China limited today's gains, he said.

    China may stop buying for reserves after purchases this year spurred price gains, business magazine Caijing reported, citing Yu Dongming, a metals industry official at the National Development and Reform Commission. The commission is the government's top economic-planning group.

    China has bought 235,000 tons of copper, 590,000 tons of aluminum and 159,000 tons of zinc, the magazine cited Yu as saying at a conference in Beijing on June 26.

    China as 'Crutch'

    "Chinese buying of nonferrous metals has been a major crutch to these markets," John Reade, a UBS AG analyst in London, said in a report. Should the nation stop bolstering stockpiles and sell metal to domestic buyers, copper "will have fewer upside drivers in the second half," he said.

    On the London Metal Exchange, copper for delivery in three months rose $64, or 1.3 percent, to $5,099 a metric ton ($2.31 a pound). Aluminum slipped 0.2 percent to $1,640 a ton. Lead sank 0.7 percent to $1,703 a ton. Zinc slid 1.3 percent to $1,560 a ton. Tin dropped 1.3 percent to $14,605 a ton and nickel was unchanged at $15,800 a ton.

    (Source: Bloomberg)