Copper in London Climbs for First Day in Six on Demand Outlook

Copper in London rebounded, climbing for the first day in six, as investors bought the metal after the longest slump since June on expectations that demand will outpace supply, cutting stockpiles. Nickel and zinc also rose.

Three-month copper in London gained as much as 1.3 percent to $9,439.25 a metric ton, and traded at $9,428.75 at 3:08 p.m. in Singapore. Expectations for a supply shortfall this year helped to drive the metal to a record $9,754 on Jan. 4.

“With supplies expected to be tight this year, we don’t rule out prices above $10,000,” said Xiao Jing, an analyst at Beijing Capital Futures Co. “At this moment, because stockpiles are ample, they might wait for dips to make purchases, but eventually the Chinese will just have to adapt to higher prices because the economy is still growing, albeit at a slower pace.”

The metal for delivery in April on the Shanghai Futures Exchange gained 1.3 percent to 70,920 yuan （$10,713） a ton, while prices in New York rose for the first day in four, by as much as 1.2 percent to $4.3150 a pound.

Inventories monitored by the Shanghai Futures Exchange rose for a second week to a six-month high of 132,166 tons last week. China is the top copper consumer. The International Copper Study Group is expecting a 435,000-ton global deficit in the refined metal this year.

Disruptions in Chile, the largest producer, may add to the shortfall. Anglo American Plc and Xstrata Plc are processing more copper from their Collahuasi mine at Xstrata’s Altonorte smelter to overcome delivery problems after their main port was shut last month by an accident, Collahuasi said yesterday.

Alcoa’s Earnings

Aluminum in London rose 0.3 percent to $2,495 a ton. It reached $2,541 on Jan. 7, the highest price since September 2008. Alcoa Inc., the largest U.S. aluminum producer, reported the highest profit in nine quarters yesterday on higher prices. The shares fell after sales missed analysts’ estimates.

“We’re not expecting further upside to aluminum prices from the current level, largely because there is a lot of spare capacity out there,” Brian Yu, an analyst at Citigroup Inc., said in a Bloomberg Television Interview.

Alcoa’s Chief Executive Officer Klaus Kleinfeld told CNBC that he sees demand growth in China slowing, while demand in the U.S. may stabilize. Global usage will gain 12 percent in 2011, Kleinfeld said in the earnings statement.

“Chinese smelting production is down about 15 percent from mid-year highs in 2010, so if aluminum prices stay up or move even higher I think you’re going to see a production response,” Yu said. “While that may not cause aluminum prices to come down materially, I think at the very least it will put a cap on where aluminum prices will likely head.”

Among other LME metals, zinc rose 0.8 percent to $2,398 a ton, lead gained 0.7 percent to $2,608 a ton, nickel climbed 1.7 percent to $24,275 a ton, and tin dropped 0.5 percent to $26,150 a ton.