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Copper recovers on demand hopes

(China Daily/Agencies)
Updated: 2010-01-22 07:56

Copper paced a gain in industrial metals including zinc as China's economy expanded at the fastest pace since 2007 in the fourth quarter, bolstering optimism that demand will increase in the world's biggest metals user.

Copper for three-month delivery increased as much as 1.7 percent to $7,500 a metric ton after a report showed gross domestic product climbed 10.7 percent from the same period a year ago, more than expected in a Bloomberg News survey. The contract traded at $7,440.25 in afternoon trade in Singapore.

China's record bank loans and $586 billion stimulus spurred raw material demand and helped copper prices more than double last year. Still, the data adds pressure to restrict lending and raise borrowing costs to prevent overheating. Copper pared gains initially after the GDP release, before rising further.

"Over 2010 we still expect China to grow strongly," Ben Westmore, minerals and energy economist at National Australia Bank Ltd, said. A lot of last year's stimulus was channeled to industries that use commodities quite intensively, such as infrastructure, he said.

March-delivery copper on the Comex division of the New York Mercantile Exchange gained as much as 1.5 percent to $3.4065 a pound.

Shanghai's benchmark third-month futures contract was almost unchanged at 60,950 yuan a ton, after touching an intra-day low of 58,380 yuan a ton.

The most-active contract for May delivery shed 30 yuan to 60,970 yuan.

Copper prices fell on Wednesday in London, Shanghai and New York on concern that China may curb bank lending, potentially crimping demand growth for industrial metals. Some lenders were asked to rein in credit because they failed to meet regulatory requirements, the China Banking Regulatory Commission said.

Rising prices and demand boosted copper production in China to a record last year as smelters expanded, according to Grace Qu, an analyst at CRU International Ltd.