Copper Rebounds From Biggest Decline in Two Months on Shortage

Jan. 26 （Bloomberg） -- Copper in London rebounded from its biggest drop in more than two months as some investors deemed the loss as excessive given the outlook for a supply shortfall this year. Zinc, aluminum and lead rose.

Copper for three-month delivery on the London Metal Exchange gained as much as 1 percent to $9,343 a metric ton and traded at $9,335 at 12:15 p.m. in Singapore. The metal fell 2.9 percent yesterday, the most since Nov. 16, on speculation that further measures to curb rising asset prices in China may reduce demand in the world’s largest user.

“It’s not surprising to see prices rebound after a sharp drop yesterday,” Fan Haibo, an analyst at Cinda Securities Co., said from Beijing. “After all, slowing demand in China will probably be offset by recovering demand in developed economies. That said, there will still be growth in China.”

April-delivery metal on the Shanghai Futures Exchange fell for a second day, by as much as 1.3 percent to 69,900 yuan （$10,677） a ton. The most-active contract dropped to less than 70,000 yuan a ton for the first time in two weeks. Futures on the Comex in New York rose 0.7 percent to $4.2570 a pound after dropping 2.8 percent yesterday, also the most since Nov. 16.

China’s economy will expand 8.7 percent in 2011 compared with 10 percent last year as the government tries to limit increases in asset prices, the World Bank said Jan. 13. China’s growth will ease partly because of “the unwinding of fiscal stimulus, restrictions placed on overheating” industries, such as housing, and a tighter monetary policy, it said.

The refined-copper market may have a shortfall of up to 600,000 tons this year, according to JPMorgan Securities Ltd. Barclays Capital expects the shortage to be 822,000 tons, while Macquarie Group Ltd. forecast a 550,000-ton deficit.

Zinc in London climbed for the first time in 10 days, snapping the longest losing streak since at least 1989, gaining as much as 1.4 percent to $2,252 a ton.

Aluminum rose 1 percent to $2,385.25 a ton and lead advanced 1 percent to $2,360 a ton. Nickel was little changed at $25,915 a ton, while tin fell 0.3 percent to $28,100 a ton.