Copper May Advance on Chinese-Demand Speculation, Survey Shows

Copper may rise on speculation economic data will signal that demand from China, the world’s biggest consumer of the metal, is to remain robust, a survey showed.

Twelve of 22 analysts, investors and traders surveyed by Bloomberg, or 55 percent, said the metal will gain next week. Eight predicted lower prices and two forecast little change. Copper for delivery in three months was up 2 percent for this week at $9,599 a metric ton at 3:31 p.m. yesterday on the London Metal Exchange.

Inflation in China probably slowed to 4.6 percent in December after higher food costs drove it to 5.1 percent the previous month, the fastest pace in 28 months, according to a Bloomberg News survey. Industrial production probably expanded 13.4 percent in December, compared with 13.3 percent in November, according to the survey. The data are due for release Jan. 20.

“We expect higher prices next week as positive Chinese economic data is released,” said Charles Bradford, an independent analyst based in New York. “Industrial production and anything related to construction will be particularly important to copper.”

Premier Wen Jiabao’s government raised borrowing costs twice in the fourth quarter, as well as ratcheting up banks’ reserve requirements, as an excess of money in the financial system threatened to fuel housing bubbles and inflation. The government has pledged a “prudent” monetary policy for this year, compared with the previous “moderately loose” stance. China’s economy will expand 8.7 percent in 2011, down from 10 percent last year, the World Bank said in a Jan. 12 report.

The red bars on the attached chart are derived by subtracting bearish forecasts from bullish estimates, with readings below zero signaling the majority of respondents expect a decline. The green line shows the copper price. The survey data shown are as of Jan. 7.

The weekly copper survey has forecast prices accurately in 57 of the past 119 weeks, or 48 percent of the time.

This week’s survey results: Bullish: 12 Bearish: 8 Hold: 2

-- Editors: John Deane, Dan Weeks