Copper Rebounds, Set for Third Weekly Increase, on U.S. Data

Dec. 17 （Bloomberg） -- Copper rebounded from London to Shanghai as better-than-expected U.S. economic data buoyed the demand outlook for the metal used in construction and household appliances. Zinc and lead also advanced.

Three-month-delivery copper on the London Metal Exchange rose for the first time in four days, gaining as much as 2.1 percent to $9,175 a metric ton and trading at $9,148.50 at 12:07 p.m. in Singapore. The contract, which reached a record $9,276.50 a ton on Dec. 14, is set for a third weekly gain.

The number of U.S. workers filing first-time claims for jobless benefits fell last week to the lowest in three weeks, while builders began work on more homes in November for the first time in three months, separate reports showed yesterday.

“The medium- to long-term prospects for metals are still good as the global economy continues to recover,” said Wang Qian, an analyst at Huatai United Securities Co. “In the short term, pullbacks are temporary and cannot be avoided.”

The metal for March-delivery on the Shanghai Futures Exchange rose as much as 1.9 percent to 68,420 yuan （$10,273） a ton, while futures on the Comex in New York advanced as much as 1.9 percent to $4.1920 a pound.

Jobless-benefit claims fell to 420,000, Labor Department figures showed. Economists in a Bloomberg survey projected an increase to 425,000, according to the median of estimates. Housing starts rose 3.9 percent from October to a 555,000 annual rate last month, Commerce Department figures showed. The median estimate in a Bloomberg survey called for a 550,000 pace. The U.S. is the second-largest copper consumer after China.

China Concerns

Copper in London declined in the past three days on concern that China may step up measures to curb lending and raise interest rates to stem accelerating inflation. Consumer prices jumped 5.1 percent last month, the fastest rate in 28 months.

“The Chinese government may take more steps to tighten credit, however, I see it as a vote of confidence in the economy, wanting to keep it healthy rather than bringing it to a standstill,” said Wang.

China will strengthen controls on the real-estate market and curb speculative investment from next year through 2015, Xinhua News Agency reported today, citing the Ministry of Housing and Urban-Rural Development.

Copper “prices are not driven by China alone,” Wang said. “To some extent, dollar weakness is helping support prices, however it’s really a depreciation of most major currencies including the euro that’s boosting commodities.”

The dollar fell for a second day against a basket of six currencies and headed for a weekly loss. The U.S. currency dropped against the euro after European Union leaders agreed to create a mechanism to contain future debt shocks and the European Central Bank armed itself with more capital.

Aluminum in London rose 0.8 percent to $2,336 a ton, zinc gained 2.9 percent to $2,284 a ton, while lead climbed 1.9 percent to $2,410 a ton. Nickel gained 0.2 percent to $24,745 a ton, and tin increased 0.3 percent to $26,240 a ton.