July 20, 2010 / 10:08 AM / 10 years ago

METALS-Copper settles up on improving demand signals

 * US building permits signal improved construction activity
 * Chinese equities give economic sentiment boost
 * Reuters base metal price survey [ID:nLDE66J0ES]
 (Changes headline, updates with New York closing copper price,
adds New York dateline/byline and analyst comments)
 By Chris Kelly and Michael Taylor
 NEW YORK/LONDON, July 20 (Reuters) - Copper rallied 2 percent
on Tuesday as another large withdrawal from London stockpiles and
unexpectedly strong building permit numbers in the United States
pointed to improved demand prospects.
 "The permits were the shining light within the housing
numbers," said David Meger, vice president and director of metals
trading with Vision Financial Markets in Chicago, referring to a
mixed housing report that showed applications for building permits
unexpectedly climbed 2.1 percent, signaling a potential pickup in
home construction activity. [ID:nN20249501]
 "Any sign of demand down the road is going to have a positive
effect on the market," he said.
 Copper for September delivery HGU0 on the COMEX metals
division of the New York Mercantile Exchange jumped 6.35 cents, or
2.2 percent, to end at $3.0015 per lb, near the upper end of its
$2.9315 to $3.0165 session range.
 On the London Metal Exchange, copper for three-month delivery
CMCU3 closed up $129 at $6,637 a tonne.
 Analysts also pointed to the near-steady decline in London
warehouse inventory levels as a sign of improving demand
conditions.
 Copper inventories fell 3,250 tonnes to 419,600 tonnes, down
from near seven-year highs at 555,075 tonnes touched in
mid-February. <0#LME-STOCKS>
 "Stocks keep falling, they're falling quite significantly,
it's looking pretty favorable," David Thurtell, an analyst at
Citi, said.
 Sentiment has been given a boost by recent builds in canceled
warrants -- material earmarked for future delivery -- which were
equivalent to nearly 8 percent of total stocks.
 Copper, which fell to a two-week low at $6,470 on Monday,
looks set to come under further pressure from a lull in demand
during the northern hemisphere summertime and from sovereign debt
problems in the euro zone, analysts said.
 The metal, seen as a gauge of economic activity, is forecast
to average $7,496 a tonne next year from $7,500 in January, a
biannual Reuters survey showed. [ID:nLDE66J0ES]
 CHINESE SHARES
 Chinese equities, often seen as an indicator for economic
activity, boosted industrial metals, after Shanghai's benchmark
stock index .SSEC jumped 1.6 percent to break the 2,500 level.
China is the world's top metals consumer.
 "There is demand for spot metal but the problem is that the
market is trading with equities, which is dominating sentiment,"
said Andrey Kryuchenkov, analyst at VTB Capital. "Towards the end
of the third quarter and towards the end of the summer, people
will be paying much more attention to fundamentals."
 Aluminum CMAL3 closed down $47 at $1,971 per tonne. LME
stocks for the metal used in transport and packaging rose 48,275
tonnes to 4.41 million tonnes.
 A large portion of those aluminum stocks are tied up in
finance deals. [ID:nGEE5BA277]
 For the latest data from the International Aluminum Institute,
click [ID:nLDE65R0UZ] [ID:nWLA8774]
 Nickel CMNI3 gained $325 to end at $19,125, tin CMSN3 rose
$295 to $18,240, near its session peak at $18,300, its highest
since early May.
 Lead CMPB3 firmed $62 to $1,837 a tonne and zinc CMZN3
ended up $67 at $1,875 a tonne.
 Metal Prices at 1920 GMT
 Metal            Last      Change  Pct Move   End 2009   Ytd Pct
                                                         move
 COMEX Cu**     301.40        7.60     +2.59     334.65     -9.94
 LME Alum      1975.00      -43.00     -2.13    2230.00    -11.43
 LME Cu        6665.00      157.00     +2.41    7375.00     -9.63
 LME Lead      1815.00       40.00     +2.25    2432.00    -25.37
 LME Nickel   19040.00      240.00     +1.28   18525.00      2.78
 LME Tin      18075.00      130.00     +0.72   16950.00      6.64
 LME Zinc      1860.00       52.00     +2.88    2560.00    -27.34
 SHFE Alu     15030.00      120.00     +0.80   17160.00    -12.41
 SHFE Cu*     53060.00      740.00     +1.41   59900.00    -11.42
 SHFE Zin     15450.00      290.00     +1.91   21195.00    -27.11
** Benchmark month for COMEX copper
 * 3rd contract month for SHFE AL, CU and ZN
 SHFE ZN began trading on 26/3/07
 (Additional reporting by Rebekah Curtis in London; editing by
Keiron Henderson, Sue Thomas and Jim Marshall)


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