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THE slump in the copper price has been brought to a halt, at least temporarily, by renewed Chinese purchases.
Continued rapid growth by China and the prospect that the downturn in the US housing market will be short-lived is bringing buyers back to the market, with a possibility that prices may start climbing again later this year.

On Tuesday, the copper price reached its lowest point since last April of $US5470 a tonne in trade on the London Metals Exchange (LME).

However, the price bounced to $US5710 following reports of falling LME stocks, particularly in its warehouses in Singapore and South Korea.

A build-up in LME stocks to 199,500 tonnes, about double their level of a year ago, has been the main reason for the plunge in the copper price from its $US8500-a-tonne peak reached in May.

Citigroup commodities analyst Alan Heap says one of the reasons for the accumulation of stocks was lower demand from China.

"Apparent consumption was very subdued, because of a combination of substitution of other materials and de-stocking by consumers."

The bureau that holds China's strategic stocks of copper also transferred some of its metal to LME warehouses in Asia. Although shifting stocks from one place to another does not alter the global supply, the LME stocks are recorded, whereas the Chinese strategic stocks are not.

Mr Heap said China's imports of copper, in all forms, reached 220,000 tonnes in November, compared with an average of 150,000 tonnes a month in the first half of last year.

Industry newsletter Metals Insider calculated that Chinese imports of refined copper metal were just under 100,000 tonnes in December, which is the highest since the peak of the Chinese metals boom in the third quarter of 2005.

It said the strength of Chinese demand explained why copper was selling on the Shanghai exchange for $US130 a tonne more than in London.

Mr Heap said the downturn in the US housing market was still depressing US copper consumption. New housing accounts for about 30 per cent of copper demand in the US. The US motor industry has also been weak.

However, there is a growing conviction that the housing downturn will be short-lived, and that it will have little effect on other sectors of the US economy or on the world economy at large.

International Monetary Fund managing director Rodrigo de Rato presented an upbeat assessment of world economic growth on Tuesday, arguing that it would reach almost 5 per cent, making the strongest five-year run of growth in 30 years.

"While the US economy has slowed down, in large part due to the correction in the housing market, a soft landing now seems more assured as lower energy prices have supported employment growth and consumption," he said.