Copper Poised for Fifth Monthly Gain; Aluminum, Zinc Advance

Nov. 30 （Bloomberg） -- Copper climbed, set for a fifth monthly gain, as positive U.S. consumer spending data and speculation about a possible shortage outweighed concerns over government tightening in China. Aluminum and zinc also gained.

The metal for three-month delivery increased as much as 1.2 percent to $8,320 a metric ton on the London Metal Exchange, and traded at $8,253.50 at 3:42 p.m. in Shanghai. Three-month zinc added 1.9 percent to $2,117.50 a ton.

“The theme seems to have returned to the supply shortage,” Li Peiying, an analyst at Essence Futures Co., said by phone from Beijing. “We might see a rebound in copper, though may be short lived.”

Copper will rise to more than $11,000 a ton by 2013 because of shortages, according to researcher GFMS Ltd. The market may move back into surplus in the first half of next year as economies slow, before returning to shortage in the following six months and thereafter, it said in a research note yesterday.

U.S. shoppers spent 6.4 percent more over Thanksgiving weekend than last year, heartened by the economic rebound, data provided by the National Retail Federation showed yesterday. Consumer spending accounts for about 70 percent of the world’s largest economy’s gross domestic product.

China Concern

In the Chinese physical market, end-user demand has declined because inventories remain high, while the discount at which imported metal trades over futures continues to widen, MF Global Holdings Ltd. said in a report yesterday.

Although copper’s fundamental backdrop remains quite bullish, “we suspect that prices have likely done too much too quickly, and would not be surprised to see a re-test of the recent lows going into yearend,” Edward Meir, senior commodity analyst at MF Global, wrote in the report.

Copper for March delivery in Shanghai rose for a fifth consecutive month, climbing 0.4 percent to close at 62,660 yuan （$9,396） a ton.

China’s stocks fell, sending the benchmark Shanghai Composite Index toward its first monthly drop since June. It tumbled as much as 3.8 percent, and closed 1.6 percent lower at 2820.181.

“Rumors of another China rate hike hit stocks first and then weighed down commodities in the day,” Wang Ning, an analyst at Xiangyu Futures Co., said by phone from Shanghai.

Rising Inflation

China may see inflation quicken again this month, after rising food costs drove prices higher in October, making it “almost certain” that inflation will top 3 percent for the full year, Sheng Songcheng, former head of the central bank’s Shenyang branch, wrote in a commentary in the official Financial News daily today.

The central bank should clearly state that it’s shifting to a “prudent” monetary policy and there is still room for further increases in reserve requirement ratios for banks, he said in the commentary. Sheng is head of the central bank headquarters’ statistics and analysis department, according to a bank official, declining to be named due to agency rules.

Aluminum in London rose 0.8 percent to $2,288 a ton, and lead added 1.7 percent to $2,225 a ton. Nickel advanced 1.2 percent to $22,685 a ton, while tin was unchanged at $23,900 a ton as of 3:54 p.m. in Shanghai.

--Helen Sun. Editors: Richard Dobson, Jarrett Banks.