Copper Gains in London on Increase in Orders to Draw Metal From Stockpiles

Copper rose in London as the dollar weakened and orders to draw metal from stockpiles jumped the most in more than two months, signaling steady demand.

The U.S. Dollar Index, a six-currency gauge of the greenback’s strength, fell as much as 0.6 percent today after five gains in a row. A weaker dollar makes metals priced in the currency cheaper in terms of other monies. Canceled warrants, as the orders are known, increased 20 percent, the most since June 8.

“A somewhat weaker dollar, giving up some of its gains from last week, is helping metals,” said Eugen Weinberg, an analyst at Commerzbank AG in Frankfurt.

Copper for delivery in three months rose $54.75, or 0.8 percent, to $7,210.75 a metric ton at 10:05 a.m. on the London Metal Exchange. The contract added as much as 1.3 percent, the most since Aug. 9, to $7,250.50. Futures for December delivery gained 0.4 percent to $3.2845 a pound on the Comex in New York.

LME prices slumped 2.9 percent last week after three weeks of gains. Copper retreated as the Federal Reserve said the U.S. economy’s recovery will be “more modest” than expected and reports showed lower European industrial production and weaker growth in Chinese factory output.

Japanese Economy

The economy in Japan expanded at an annualized 0.4 percent in the three months through June, the Cabinet Office said today. That was down from 4.4 percent in the first quarter and less than estimated in a Bloomberg survey. The country is the world’s fifth-largest copper user after China, the U.S., Germany and South Korea.

“The current softness in economic data, combined with increasingly mixed signals from underlying commodity markets, is likely to continue to generate choppy commodity-price action in the near term,” Goldman Sachs Group Inc. said in an Aug. 13 report.

Still, “high and rising emerging-market demand levels against limited supply growth in key commodities are likely to increasingly tighten balances,” Goldman Sachs analysts wrote. Copper and zinc have the most “upside” into the end of the year, according to the bank.

Copper stockpiles tracked by the LME shrank for a second day to 406,700 tons, according to daily exchange figures. They are down 1.6 percent this month after sliding 8.3 percent in July, the most since June 2009, and are down 19 percent this year, on course for the first annual drop since 2004.

Tin, Nickel

Canceled warrants rose 4,025 tons to 24,525 tons, the highest level since Aug. 9.

Tin for three-month delivery on the LME fell 0.9 percent to $20,620 a ton. Inventories in LME-monitored warehouses rose 0.5 percent to 13,940 tons. One party holds between 50 percent and 79 percent of available LME stockpiles.

Nickel rose 0.5 percent to $21,376 a ton. Demand growth in China, the world’s biggest consumer, will slow this year as stainless-steel production cools and competition persists from lower-cost alternatives, said Beijing Antaike Information Development Co.

Consumption may increase as much as 4.5 percent to 460,000 tons, Xu Aidong, senior nickel analyst at Antaike, said in an interview today. Demand jumped 33 percent last year, Xu said.

Aluminum climbed 0.5 percent to $2,120 a ton, zinc rose 1 percent to $2,067 a ton and lead gained 0.9 percent to $2,075 a ton.