London Metal Exchange copper made strong gains Thursday on the back of bullish Chinese copper consumption data, with analysts expecting the uptrend to continue in future weeks.
Three-month copper prices climbed roughly 3% from Wednesday to a PM kerb of $5,715 a metric ton, but have climbed about 7.5% from last week's low of $5,470/ton.
"The upward trend in copper appears to be gathering momentum, supported by the prospects of stronger Chinese buying in the weeks ahead," said Kevin Norrish of Barclays Capital.
"News that some major Chinese copper producers have very low inventory levels and themselves face short-term supply constraints is in line with our own views that the process of de-stocking of copper and copper products in China has now come to an end," Norrish added.
Copper stocks at Jiangxi Copper fell to "around 1,000 metric tons, down from a usual 3,000 tons", according to a company official Wednesday.
Many market participants had been expecting China – the world's largest consumer of copper – to restock after the country's demand for the metal fell last year, partly because of heavy de-stocking. But, the Chinese government stopped sales of copper from its stockpiles in late 2006, according to Michael Widmer of Calyon.
According to customs data issued Thursday, China's refined copper imports rose 59.4% on year in December to 95,831 tons.
In addition, China's economy continued to beat expectations in 2006, expanding faster than forecast in the fourth quarter and recording full-year growth of 10.7%, the quickest annual pace since 1995.
China's gross domestic product, the total value of goods and services in the economy, grew 10.4% in the fourth quarter compared with a year earlier, slowing slightly from the 10.6% increase in the third quarter.
"This indicates that the economy is booming, supporting demand for metals in general," according to another London-based trader.
Meanwhile, the market eyed cautiously labor negotiations between unionized workers and BHP Billiton at the company's Cerro Colorado copper mine in Chile.
The union said Tuesday it will likely turn down the company's wage offer. The current contract expires Jan. 31.
Elsewhere, star performers nickel and tin rose Thursday, although modestly compared to their recent rallies.
Nickel hovered around $38,000/ton, while tin hovered near $12,400/ton. Nickel continues to find support from an extremely tight market and the threat of a strike next week at Xstrata's Sudbury operations.
Nickel stocks fell 66 tons to 4,950 tons Thursday, with canceled warrants – or metal accounted for and about to be drawn down – jumping to 45% at 2,250 tons. Stocks are down over 80% from year-ago levels and the less-than 3,000 tons available in warehouses comprise roughly one day's worth of global nickel consumption.
Meanwhile, tin remains near record highs, as uncertainties regarding supply from the independent smelters in Bangka, Indonesia continue.
The combination of efforts made by the Indonesian government to restrict refined tin exports, as well as the ongoing closure of small-independent smelters, are fueling concerns over a shortage of supplies later in the year.
Prices in dollar a metric ton.
3 Months Metal Bid-Ask Change from
Wednesday PM kerb
Copper 5859.0-5860.0 Up 144
Lead 1702.0-1704.0 Up 20
Zinc &nb
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