Copper Rebounds From London to Shanghai as Fundamentals Intact

Copper in London rebounded from its worst decline in more than four months as some investors deemed the drop as excessive as they expect supply may lag behind demand. Futures in New York and Shanghai also rebounded.

Copper for three-month delivery on the London Metal Exchange rose as much as 0.9 percent to $8,691.75 a metric ton, and traded at $8,670 a ton at 9:16 a.m. Singapore time, after falling as much as 0.3 percent earlier. It declined as much as 3.2 percent on Nov. 12, the biggest intraday drop since June 29, on speculation China may further tighten economic policy.

“While we recognize copper is a well-broked bull story and there is the potential for a pullback, we continue to believe that copper prices will rise further in 2011, with any pullbacks in the short term potentially presenting good buying opportunities,” Macquarie Group Ltd. analysts led by Jim Lennon wrote in a note today.

December-delivery copper on the Comex in New York gained as much as 1.5 percent to $3.9560 a pound, after dropping as much as 1.1 percent earlier and 3.3 percent on Nov 12. Futures in Shanghai rose as much as 1.5 percent to 66,640 yuan （$10,041） a ton, after earlier losing as much as 0.8 percent and tumbling by the daily limit on Nov. 12.

Anglo American Plc and Xstrata Plc continued to produce copper at a normal rate at the Collahuasi mine, the world’s fourth largest, in Chile, as a worker’s strike entered a tenth day. Copper in London rose to a record $8,966 a ton last week partly on concern shipments at the mine, which accounts for more than 3 percent of the world’s production of the metal, may be disrupted.

“The fundamental outlook for copper in 2011 is bullish and it is hard to see copper in anything other than sizeable deficit -- we continue to forecast a 420,000-ton deficit in 2011,” Lennon wrote. “At present, China is de-stocking concentrate, scrap and refined copper. Our view is that China will de-stock the available scrap and concentrate by early next year and will need to return to the market around that time.”

Nickel in London increased 1.4 percent to $22,990 a ton, and aluminum was little changed at $2,403 a ton. Zinc dropped 1.1 percent to $2,368 a ton, lead declined 0.8 percent to $2,499.75 a ton and tin shed 0.2 percent to $26,100 a ton.