Copper in London Set for Best Week in a Month on Outlook for China Demand

Copper in London climbed, set for its first weekly advance in three, on optimism that China’s demand is improving, tempering concern about Europe’s fiscal crisis. Zinc and nickel also gained.

Three-month copper on the London Metal Exchange gained for the first day in three, rising as much as 0.7 percent to $9,125 a metric ton. It last traded at $9,085 by 10:50 a.m. Singapore time, up 1.6 percent this week, the most in a month. Aluminum and lead also rose on better-than-estimated U.S. jobless claims and housing starts.

“The market is pricing the expectation for a pickup in demand in the months ahead,” Yu Haijian, an analyst at Bohai Futures Co., said from Changchun in Jilin.

September-delivery copper in New York declined 0.4 percent to $4.1205 a pound, while August-delivery metal on the Shanghai Futures Exchange added as much as 0.6 percent to 68,540 yuan ($10,600) a ton.

Copper stockpiles in China, the biggest consumer, dropped by 36 percent last month and 21 percent in April. Inventories in bonded warehouses, used to store shipments before duties are paid, may have fallen 50 percent over the past two months, Chinese traders and analysts estimated this week, prompting speculation of a pickup in imports after two months of decline.

In the U.S., first-time filings for unemployment benefits declined last week to 414,000, compared with 420,000 claims estimated by economists surveyed by Bloomberg News. Construction began on 560,000 houses at an annual pace, exceeding the 545,000 median forecast of economists.

Europe, China

“The global economic environment remains fraught with uncertainty, which will keep a lid on prices,” said Yu.

Greek Prime Minister George Papandreou’s failure to win support for more austerity fueled speculation the country will fail to meet its obligations. Alan Greenspan, former Federal Reserve chairman, said a default by Greece is “almost certain” and could help drive the U.S. economy into recession.

In China, the central bank announced a half percentage point boost in the reserve requirement ratio for banks on June 14, adding to its 11 reserve-requirement and four interest-rate increases since early 2010 to cool inflation, which climbed to 5.5 percent in May, the fastest pace in almost three years.

Aluminum in London rose 0.3 percent to $2,564 a ton, zinc advanced 1.2 percent to $2,232.50 a ton, lead gained 0.8 percent to $2,500 a ton and nickel climbed 1.2 percent to $21,850 a ton. Tin hadn’t traded.