Copper may rise on Chinese demand

Firm Chinese demand may push up copper prices in the coming week as the procurement agency in that country may take advantage of the current low prices to build the metal¡¯s stockpile needed for the 4-trillion-yuan ($585 billion) stimulus programme.

Recent months, China has resumed stockpiling base metals to meet its infrastructure demand, giving a boost to prices globally. According to reports, the country¡¯s investment spending climbed 26.5 per cent in the first two months (January-February) as it poured money into infrastructure projects such as roads, railways and power to counter global recession. These are high metal consuming sectors.

Import of copper and copper products into China soared in March as the State Reserve Bureau of China raised inventories. Scrap imports in the country were recorded at 330,000 tonnes in March compared with 539,733 tonnes in the same period last year. Import of aluminum and aluminium products more than doubled to 147,181 tonnes in March compared with the same month last year.

The country¡¯s refined copper purchases may jump 37 per cent to 2 million tonnes this year as per estimates.

After hitting a lifetime high of $8,800 per tonne in early 2008, copper plunged to the $3,000 level towards the close of the year, but has recovered to $4,465 this year. In the first quarter of 2009, base metals witnessed mixed performance. Copper led the pack gaining over 30 per cent, supported mainly by Chinese buying. Copper inventories during this period gained sharply by over 49 per cent. But the prices have not declined on State Reserve Bureau buying.

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