Copper paces advance as China’s output boosts outlook

Copper climbed for a second day, pacing an advance in industrial metals including zinc and lead, on speculation that the economies of China and India are weathering Europe’s sovereign-debt crisis.

Three-month metal on the London Metal Exchange rose as much as 1.3 per cent to $7,697 per metric tonne, the highest price since December 12. Copper, which fell 21 per cent in 2011 in the worst performance since 2008, was at $7,675.25 at 1:27 pm in Singapore. The price gained 1.5 per cent to $3.4865 per pound on the Comex in New York.

A Purchasing Managers’ Index in India climbed the most in six months in December, while manufacturing in China rebounded in the same month, separate reports showed. Markets in China, the world’s largest metals user, are closed for a holiday on Tuesday.

“The manufacturing data is going to help sentiment,” said Nick Trevethan, senior commodities strategist at Australia & New Zealand Banking Group Ltd. “There may be some physical activity going on as we come up to the Lunar New Year but the lack of clarity about economic growth in the West probably means just- in-time inventory management’s going to be the order of the day.”

Chinese buyers tend to stockpile metals before the holidays to prepare for a ramp up in production after the break. The nation marks the Lunar New Year with a weeklong break starting on January 23.

“We saw last year Chinese consumers were nervous about buying material ahead of time and I don’t see that changing, not in the first six months,” Trevethan said by phone from Singapore. “The situation in Europe is such that people are still very anxious and the cost of borrowing in China is still very high so for the moment it’s still expensive to finance your stockpiles.”

Zinc in London climbed for a third day, gaining as much as 1.1 per cent to $1,865 per tonne, while lead also rose for a third day, advancing as much as 0.7 per cent to $2,049 per tonne. The LME was shut for a holiday yesterday. Tin increased 0.5 per cent to $19,300 a tonne, nickel was little changed at $18,715 per tonne, and aluminum was also little changed at $2,022.75 per tonne.