METALS-Copper at 3-wk high on China buying, lower stocks

* Chinese arbitrage buying boosts prices

* Corporate and macroeconomic data cap gains

* Coming Up: Fed chairman Ben Bernanke 1800 GMT

(Recasts, updates prices and comments)

By Michael Taylor and Humeyra Pamuk

LONDON, July 21 (BestGrowthStock) – Copper rose to its highest in
more than three-weeks on Wednesday due to strong physical and
Chinese buying and falling inventories, but traders said
economic growth worries were likely to keep a lid on prices.

Copper’s rise lifted other industrial metals. Zinc climbed
to a seven-week peak, while tin hit its highest since April 30.
Battery-material lead saw a two-month high.

Benchmark copper for three-month delivery (CMCU3: ) on the
London Metal Exchange traded at $6,839 a tonne by 1441 GMT, from
$6,637 on Tuesday. The metal, used in construction and wiring,
earlier touched $6,874.75, its highest since June 28.

“There was Chinese buying overnight, which triggered this
rise,” RBC Capital Markets trader Randy North said. “It then
pushed through some stop levels; $6,750 and then $6,800 and it’s
been technical buying and short-covering after that.”

North said from a technical point of view, markets could go
higher but he added: “Unless you see a serious tightening in the
physical market or Euro up through 1.30, I just don’t see how
copper can sustain these kinds of levels.”

Copper has been stuck in a range of around $6,300 to $6,900
since early June. “You’ve got this tussle between positive and
negative, and as a consequence I see these things trade range
bound,” said analyst Daniel Brebner at Deutsche Bank.

Continuous stock drawdowns underpin prices, but unexpectedly
poor economic data from the United States, like Tuesday’s new
U.S. home construction hitting an eight-month low, is capping
further gains and clouding the demand prospects.

Reuters’ mid-year metals price poll showed copper was
expected to average $6,878 a tonne this year from $7,077 a tonne
in the January poll. For aluminium the number was an unchanged
$2,094 a tonne. [ID:nLDE66J0ES]

For graphics on price forecasts click:


Metals did not take any support from the currency markets on
Wednesday, where the euro (EUR=: ) slipped versus the dollar,
making dollar-denominated metals more expensive for non-U.S.
currency holders.[FRX/]

Investors also fretted over by data showing China’s imports
of refined copper fell for a third straight month in June.
[ID:nTOE66K02T] [ID:nBJL002049]

Copper stocks fell 1,975 tonnes to 417,625 tonnes, down from
near seven-year highs at 555,075 tonnes hit in mid-February.
Industry data showed, in the first four months of the year the
copper market had moved into a deficit of 67,000 tonnes, from a
74,000 surplus in the same year-ago period. [ID:nLDE66K1NI]

“We expect the firmer tone to continue through the balance
of the week, as declining LME stocks, steadier equity
markets…will all contribute to a steadier tone,” MF Global
said in a research note.

Aluminium (CMAL3: ) traded at $1,995 versus $1,971. Zinc
(CMZN3: ) was last at $1,914.50 a tonne from $1,875 and tin
(CMSN3: ) was last bid at $18,370 from $18,240.

Steel-making ingredient nickel (CMNI3: ) traded at $19,330 a
tonne from $19,125, while lead (CMPB3: ) gained to $1,864 from

Metal Prices at 1440 GMT
Metal Last Change Pct Move End 2009 Ytd Pct

COMEX Cu 307.70 7.85 +2.62 334.65 -8.05
LME Alum 2006.00 35.00 +1.78 2230.00 -10.04
LME Cu 6833.00 196.00 +2.95 7375.00 -7.35
LME Lead 1856.00 19.00 +1.03 2432.00 -23.68
LME Nickel 19285.00 160.00 +0.84 18525.00 4.10
LME Tin 18200.00 -40.00 -0.22 16950.00 7.37
LME Zinc 1908.00 33.00 +1.76 2560.00 -25.47
SHFE Alu 15015.00 -15.00 -0.10 17160.00 -12.50
SHFE Cu* 53350.00 290.00 +0.55 59900.00 -10.93
SHFE Zin 15450.00 0.00 +0.00 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

Stock Analysis

(Reporting by Humeyra Pamuk, Editing by Alison Birrane)

METALS-Copper at 3-wk high on China buying, lower stocks