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Message: Re: Copper Advances Most in Three Weeks on Demand Speculation

By Anna Stablum

May 6 (Bloomberg) -- Copper rose the most in three weeks in London on speculation that demand is strengthening after stockpiles shrank and higher prices being paid for the metal in China suggest more supplies may be withdrawn from warehouses.

Global inventories monitored by the London Metal Exchange dropped for 16 straight sessions through May 5. Copper booked for delivery now makes up 18 percent of total stockpiles, up from about 1 percent at the start of the year.

“The general draw down in copper will probably continue, and it is obviously supportive,” Dan Smith, an analyst at Standard Chartered Plc in London, said by phone. “We are quite bullish copper short term, and for the time being, the general trend across metals is going to be up.”

Copper for delivery in three months rose as much as $264, or 5.8 percent, to $4,794 a metric ton on the LME, the biggest jump compared with intraday prices since April 14. The contract was at $4,785 as of 5:25 p.m. in London. The metal for July delivery gained 10.80 cents, or 5.2 percent, to $2.1910 a pound on the New York Mercantile Exchange’s Comex division.

Metals extended rallies after companies in the U.S. cut fewer jobs in April, indicating the worst of the recession’s job losses may have passed. Payrolls fell by an estimated 491,000 workers last month, less than economists forecast and the fewest since October, figures from ADP Employer Services today showed.

Members of a labor union at Xstrata Plc’s Lomas Bayas copper mine in Chile walked off the job today to press for higher wages and bonuses, said a leader of the group.

The strike indicates that current copper prices have led to a “reawakening of miners’ wage expectations,” a Barclays Capital report said today.

“The ongoing underperformance of copper mine supply” would support copper price higher as the poor performance was unlikely to be reversed in the next two years, Barclays said.

Shanghai Prices

Copper for delivery in August closed at 37,980 yuan ($5,568) a ton today on the Shanghai Futures Exchange. The premium to the LME “implies imports will remain high in May,” Smith said. China imported a record amount of copper in March and preliminary figures for April may be released May 12, according to the Web site of China’s customs office.

Inventories in LME-monitored warehouses in Singapore, a location close to China, have plunged 91 percent since reaching this year’s peak on April 14. The metal, used in electrical wiring and plumbing, has gained 54 percent this year in London, buoyed by Chinese demand.

Among other LME metals for delivery in three months, aluminum rose 2.3 percent to $1,580 a ton, after touching $1,590, the highest intraday price since Jan. 12.

Nickel added 6.7 percent to $12,800 a ton. Tin advanced 7.6 percent to $13,450 a ton, after earlier reaching $13,535, the highest since November.

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