Copper Advances for a Second Day on Supply Shortage Expectation

Copper climbed for a second day from London to Shanghai on expectation that supplies will not keep pace with demand as mining companies struggle to boost output. Tin jumped to a record.

Three-month copper on the London Metal Exchange rose as much as 1.1 percent to $10,045 a metric ton and was at $10,011.25 at 10:04 a.m. in Singapore. The metal reached a record $10,160 a ton on Feb. 7. All six LME base metals advanced, led by a 1.6 percent gain in nickel.

Production of refined copper is expected to increase 1.1 percent to about 19.3 million tons this year, while usage is forecast to grow 4.5 percent to 19.7 million tons, according to the International Copper Study Group, resulting in a 435,000-ton shortfall.

“Investors are very positive about copper’s fundamentals this year and are quite willing to enter the market on dips,” Zhang Xi, an analyst at Luzheng Futures Co., said from Shandong. “We’d caution entering at the current price level because we’ve not yet seen physical buying in China pick up much after the Lunar New Year break.”

May-delivery metal on the Shanghai Futures Exchange, which re-opened on Feb. 9 after the Lunar New Year break, gained as much as 0.9 percent to 76,550 yuan （$11,607） a ton before trading at 75,900 yuan a ton. Futures in New York climbed by as much as 0.8 percent to $4.5795 a pound and last traded at $4.562 a pound.

Supply disruptions and labor disputes helped drive a 30 percent gain in London prices last year. Workers at Codelco’s Chuquicamata division may protest potential job losses as the copper mine in northern Chile starts to run out of profitable ore, El Mercurio de Calama reported yesterday. Codelco is the world’s largest producer.

Tin Record

Tin climbed as much as 0.6 percent to a record $31,690 a ton, surpassing the previous peak of $31,650 reached on Feb. 8. Output of refined tin by PT Timah, Indonesia’s largest producer, was 40,413 tons last year, down from 45,086 tons in 2009, the company said Feb. 7.

Tin was the LME’s best performer last year, jumping 59 percent as supplies from Indonesia, China and the Democratic Republic Congo dwindled. China is the world’s largest producer and Indonesia the largest exporter.

A jump in crude oil prices helped buoy other commodities including metals, said Zhang. Oil rose after Egyptian President Hosni Mubarak defied calls for his resignation, agreeing only to delegate some authority to his deputy, prompting concern supplies may be disrupted amid further unrest.

Aluminum in London rose 0.4 percent to $2,548.50 a ton, zinc gained as much as 0.8 percent to $2,470 a ton, lead increased 0.6 percent to $2,526 a ton and nickel advanced 1.6 percent to $28,300 a ton.