Aug. 23 (Bloomberg) -- Copper rose in London on expectations that demand growth in China, the world's largest user of the metal, will exacerbate a squeeze on global supply.

China's growth will ``remain strong,'' Melbourne-based BHP Billiton Ltd., the world's biggest mining company, said in an earnings statement today. Supply disruptions that have helped copper prices more than double in the past year will continue, BHP Chief Executive Officer Chip Goodyear said on a conference call today.

``These are pretty positive comments all around, and base metals are holding firm on the back of that,'' said Robin Bhar, an analyst in London at UBS AG. Goodyear ``mentioned he believes prices are part of an extended price cycle, implying prices will stay higher for longer.''

Copper for delivery in three months rose $20, or 0.3 percent, to $7,640 a metric ton at 10:18 a.m. on the London Metal Exchange. Prices earlier dropped as much as 0.7 percent and rose as much as 0.5 percent.

Copper inventory tracked by the LME fell 125 tons to 122,650 tons, the second straight decline, exchange figures today showed.

China's copper usage dropped 5 percent in the first four months this year compared with a year earlier, the Lisbon-based International Copper Study Group said last month. ``The Chinese are not buying at the moment,'' said Herwig Schmidt, a trader in London at Triland Metals Ltd.

Nickel inventory rose 7.5 percent on top of a 5.7 percent increase yesterday. Nickel for delivery in three months fell $350, or 1.2 percent, to $29,600 a ton, the first drop in four sessions. The metal yesterday rose to the highest in at least 19 years. The LME last week imposed trading restrictions because of a shortage of the metal used in stainless steel.

``Consumers are holding back from doing longer-term business,'' Schmidt said. ``It's difficult to justify these prices.''

To contact the reporter on this story: Claudia Carpenter in London at Ccarpenter2@bloomberg.net

Last Updated: August 23, 2006 05:30 EDT