Copper Rises Most in Six Months on Chinese Demand Expectations

By Brett Foley

Feb. 22 (Bloomberg) -- Copper rose the most in more than six months in London on speculation that demand from Chinese buyers will keep expanding. Lead advanced to a record.

Copper trading on the Shanghai Futures Exchange will resume on Feb. 26 after the weeklong Lunar New Year holiday. Chinese imports of copper and copper products jumped 44 percent in January from a year earlier, customs data showed Feb. 12. Chinese refined-copper imports in January were about 132,000 metric tons, almost double last year's average monthly imports of 69,000 tons, Macquarie Bank Ltd. said Feb. 19.

``We expect to see, post the Chinese New Year, more activity by Chinese buyers in the copper market,'' said Daniel Brebner, an analyst at UBS AG in London. ``We do expect to see considerable strength in copper over the next quarter or so.''

Copper for delivery in three months on the LME advanced $315, or 5.4 percent, to $6,105 a metric ton as of 4:47 p.m. local time. The contract earlier rose as much as 5.6 percent, the biggest intraday gain since Aug. 4. Today's gain pared this year's losses to 3.5 percent.

``The market is still expecting to see substantial restocking by the Chinese,'' said Andrew Silver, a trader with Natexis Commodity Markets Ltd., one of 11 companies trading on the floor of the London Metal Exchange.

Lead advanced to record for a fifth day as stockpiles fell to their lowest since June 2005. Inventories monitored by the LME fell by 150 tons to 32,375 tons, the exchange said in a daily report. They have slumped 56 percent in the past 12 months.

Lead demand beat supply by 88,000 tons in 2006, the World Bureau of Metal Statistics said in a report yesterday. Calyon, one of 11 companies trading on the floor of the LME, cut its forecast for the surplus of refined lead this year by 68 percent to 44,000 tons because of ``tightness'' in Europe, director of metals research Michael Widmer said in a report today.

Australian Cyclone

Xstrata Plc maintained ``force majeure'' at its Northfleet plant in the U.K. after ore supplies from Australia were delayed following a cyclone last month. Force majeure is a legal clause that allows a company to default on a sales contract due to circumstances beyond its control.

Lead increased $55, or 3 percent, to $1,880 a ton. Earlier it traded at $1,900 beating yesterday's record by $50.

Tin fell after earlier trading at a 17-year high for a third consecutive day on concern that supplies from Indonesia, the world's biggest producer of the metal after China, will decline after a crackdown on illegal mining. Tin miners had until today to register for the right to export the metal.

Tin for delivery in three months lost $150, or 1.1 percent, to $13,700 a ton, after earlier rising to $13,975, the highest since at least 1989, according to data on Bloomberg.

Tin Mining

The situation in Indonesia ``remains extremely fluid'' and there is ``great uncertainty'' as to how many smelters will be able to reopen, Robin Bhar, a London-based analyst at UBS AG, said in a report today.

PT Timah, Indonesia's largest tin miner, has made its last shipment of tin for this month and hopes to get a license by the end of next week to continue exporting in March, the company's president-director said today.

Among other metals for delivery in three months on the LME, nickel dropped $700 to $38,800 a ton, aluminum gained $34 to $2,792 and zinc advanced $120 to $3,480.