Copper, Nickel, Lead Rally as China's Economic Growth Quickens

Bloomberg 20 Jan--Copper in London rebounded from its biggest drop in two months, and nickel, zinc and lead rallied, as growth in China, the world’s biggest metals consumer, accelerated in the fourth quarter.

Three-month delivery copper advanced as much as 0.6 percent to $9,628 a metric ton before trading at $9,615 a ton on the London Metal Exchange at 10:44 a.m. Singapore time. The metal dropped 1.3 percent yesterday, the most since Nov. 23, after reaching a record $9,781, as U.S. housing starts declined.

China’s expansion quickened to a more-than-forecast 9.8 percent in the fourth quarter, despite policy makers’ efforts to rein in credit and counter inflation. The government ordered banks to set aside more reserves six times in 2010 and boosted interest rates twice to prevent the economy from overheating.

“We’ve always been of the view that China’s growth may slow this year but it will continue growing,” Lin Ling, an analyst at Industrial Futures Co., said from Shanghai. “Government measures are not going to halt the growth.”

April-delivery metal on the Shanghai Futures Exchange fell as much as 2 percent to 71,470 yuan （$10,848） a ton, before trading at 71,860 yuan. Futures on the Comex in New York climbed as much as 0.4 percent to $4.388 a pound, after dropping 1.3 percent yesterday, the most since Jan. 6.

Housing starts in the U.S. fell 4.3 percent in December to the lowest annual rate since October 2009, Commerce Department figures showed. Builders are the biggest users of copper in the U.S., the largest consumer after China.

Copper Demand

“Fundamentals are good in the medium to long term so there are many willing investors entering the market whenever there’s a big decline,” said Lin “Trade has been choppy lately, in part influenced by the dollar and the fact that it’s not a seasonally good time for metals now.”

Copper demand will outstrip supply for the next two years as the economy recovers, China sustains consumption and mine output drops, said Pan Pacific Copper Co., Japan’s top producer.

Demand will likely exceed supply by 635,000 metric tons in 2011, the biggest deficit since 2004, compared with 234,000 tons last year, said Hidenori Kamoo, general manager of the marketing department at Pan Pacific Copper. The shortage may be 91,000 tons in 2012, he said. The International Copper Study Group has predicted a shortfall of 435,000 tons.

Aluminum in London gained 0.3 percent to $2,437 a ton, zinc rose 0.4 percent to $2,399.75 a ton and lead added 0.5 percent to $2,543 a ton. Nickel climbed 1 percent to $25,930 a ton, and tin was little changed at $26,900 a ton.