China demand keeps copper high

Copper was little changed, capping a weekly gain on speculation that global demand will be buoyed by China, the world's largest consumer of the metal.

Chinese imports of copper and copper products rose 43 per cent in the eight months ended August 31, the Beijing-based customs office said this week. Stockpiles in Shanghai fell to the lowest level in more than five months, a report showed today. Copper, used in pipes and wires, has gained 18 per cent this year as global demand outpaced supplies.

"The increase in copper consumption in China, India and other emerging markets is much larger than any decrease that a consumer-led recession in the US would cause,'' Don Lindsay, chief executive officer of Teck Cominco, said in an interview today.

Copper futures for December delivery dropped 0.4 cent to $3.3925 a pound on the Comex division of the New York Mercantile Exchange. The price gained 4.3 per cent this week.

Trading was 'choppy' today as traders weighed mixed US economic news, said Eric Wittenauer, an industrial-metals analyst at AG Edwards & Sons in St Louis. A measure of the US consumer confidence gained more than estimated, while retail sales and industrial production rose less than forecast.

On the London Metals Exchange, copper for delivery in three months gained $12, or 0.2 per cent, to $7,550 a tonne ($3.437 a pound). The metal rose to a record $8,800 in May 2006. "Traders are still concerned about growth and the subprime losses,'' said Darren Stoody, futures trading director at Omnisource Inc in Fort Wayne, Indiana.

Copper has fallen 5.6 per cent in the past two months on speculation loss from subprime mortgages will slow the US economy, curbing metals demand.

"Supply and demand will be pretty good and will continue to be good for quite a while, but it will be cyclical and it will be volatile,'' Teck's Lindsay said. "Corrections will be steep and scary, and that's what we've just gone through.''

Limited supplies will boost the copper price as miners struggle to increase output and face production disruptions, Lindsay said.

Codelco, the world's largest copper producer, won't be able to recover all the output lost during a labour strike in late June and July, Executive President Jose Pablo Arellano said today. Southern Copper Corp said this week strikes in Mexico may reduce output this year.

"Mines are not producing what one might have expected, and that's what's going to keep copper buoyant,'' Stephen Briggs, an analyst at SG Securities in London, said yesterday.