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Copper jumps to 7-week high

(China Daily/Agencies)
Updated: 2009-10-23 08:42

Copper gained to the highest level in more than seven weeks in Shanghai on optimism that economic growth in China, the world's largest user, will drive demand for industrial metals.

China's economy expanded 8.9 percent in the third quarter from a year earlier, the fastest pace in a year, as a $586-billion stimulus and record lending growth helped the nation lead the world out of recession.

"The GDP number came in within expectations and a lot of the good news was already priced into the market," said Li Huazheng, a trader at Shanghai Securities Co.

January-delivery copper on the Shanghai Futures Exchange rose as much as 1,110 yuan, or 2.2 percent from the previous settlement price, to 51,100 yuan a metric ton, the highest price since Aug 31. The contract ended the day at 50,830 yuan.

Copper for delivery in three months on the London Metal Exchange fell as much as 0.5 percent to $6,557.25 a ton, and traded at $6,560 a ton in afternoon trade, as a rebound in the dollar eroded demand for commodities priced in the US currency.

"The question next on investors' minds is whether this growth can be sustained," Li added. Inflationary expectations are increasing in China as prices rise month-on-month, statistics bureau spokesman Li Xiaochao said at a press briefing in Beijing yesterday.

London Metal Exchange stockpiles jumped 76 percent in the past year as the worst post-war recession has curbed demand for the metal used mainly in construction and automobiles.

Inventories of copper in Shanghai have nearly tripled in the past year.

In other metals, zinc rose to multi-month highs as Shanghai futures kept up with recent gains in London, spurred by supply concerns in No 2 zinc producer Peru.

Three-month LME zinc rose a notch to a new 17-month high of $2,242 a ton, before easing to $2,210 by 0700 GMT.

Shanghai zinc closed up 240 yuan at 16,445 yuan a ton, off a high of 16,665 yuan, its loftiest since early June 2008.