Mining Profits...Investing In Industrial Metals

Copper rose in London, snapping a two-sessions slide, on speculation that makers of metal wires and pipes, particularly in China, will increase purchases to avoid a supply shortfall this year.

Demand for copper will exceed mine output by 52,000 metric tons through 2006, after a deficit of 360,000 tons last year, Goldman Sachs Group Inc. forecast on Sept. 18. Stockpiles have plunged 86 percent in the past four years, leaving stockpiles monitored by the London Metal Exchange at levels sufficient to meet demand for just three days.

``There is no doubt that consumers are adding support to this market,'' said Peter Hickson, a London-based strategist at UBS Ltd. who has worked more than three decades in the metals and mining industry, including the last 12 as a metals analyst.

Copper for delivery in three months gained $45, or 0.6 percent, to $7,550 a metric ton ($3.425 a pound) at 1:56 p.m. on the London Metal Exchange. Prices have doubled in the past year and reached a record $8,800 on May 11.

China, the world's largest copper-buying nation, probably used about 1 million tons of the metal from their own stockpiles in the past 12 months, which will force the country to boost imports as domestic supply declines, Hickson said.

``The Chinese have got themselves short of copper,'' he said. Copper's 14 percent decline from its record high came from selling by hedge funds, not actual users of the metal, he said.

Inventories

Stockpiles of copper tracked by the LME increased 325 tons to 121,950 tons, the LME said in a daily report today. In China, inventory monitored by the Shanghai Futures Exchange fell to a 19-week low last week, according to the bourse's weekly report.

The metal declined yesterday and Sept. 22 on a speculation that a slowdown in the U.S. housing market may hurt demand for wire and pipe. The U.S. is the world's second-largest consumer of copper after China.

Copper for delivery in December fell 0.35 cent, or 0.1 percent, to $3.444 a pound at 8:56 a.m. on the Comex division of the New York Mercantile Exchange. A futures contract is an obligation to buy or sell a commodity at a fixed price for a specific delivery date.

Nickel stockpiles dropped 312 tons to 5,724 tons, the LME said, equivalent to less than two days of global consumption. Nickel inventory has declined 84 percent this year.

Nickel Prices

Prices of nickel, used as an alloy in stainless steel, gained $300, or 1 percent, to $28,300 a ton. The three-month contract has doubled in the past year as production of stainless steel expanded.

Global stainless output jumped 6.5 percent to 13.9 million tons, the highest ever, in the first half, the Brussels-based International Stainless Steel Forum said today on its Web site. Production from China, the world's largest producer, soared 44 percent to 2.3 million tons, the forum said.

Among other LME-traded metals, aluminum fell $4 at $2,514 a ton and lead advanced $25 to $1,365 a ton. Tin added $75 to $9,050 a ton. Zinc dropped $19 to $3,380 a ton.