Lead and Zinc Gain as Chinese Manufacturing Expansion Speeds Up

Lead rose for a second day in London and zinc gained for a third session after manufacturing expanded at a faster pace in China, the world’s biggest consumer of industrial metals.

A Purchasing Managers’ Index from HSBC Holdings Plc and Markit Economics showed a preliminary reading of 51.7 in March, according to a statement today, compared with the 50.4 final level for February. Readings above 50 indicate growth. Curbs on China’s real-estate market helped pull the LME Index of metals to the lowest level since November this week.

“Confidence may return and the lower prices may be seen as a buying opportunity,” William Adams, an analyst at Fastmarkets.com in London, said by e-mail. “We also feel that a stronger recovery in China lies ahead.”

Lead for delivery in three months added 0.6 percent to $2,202 a metric ton by 10:11 a.m. on the London Metal Exchange and zinc climbed 0.6 percent to $1,943 a ton. Copper advanced 0.2 percent to $7,632 a ton and the metal for delivery in May rose 0.1 percent to $3.449 a pound on the Comex in New York.

Copper pared gains after stockpiles of the metal tracked by the LME expanded to the highest level in almost a decade and imports of copper into China reached a 19-month low. Inbound shipments of refined copper slid to 214,949 tons last month, Chinese customs figures showed today. Exports of the metal increased for a sixth month.

LME copper stocks rose for a 26th session to 557,450 tons on gains in New Orleans and Malaysia’s Johor, daily exchange figures showed. Inventories surged 74 percent this year to the highest since October 2003.

“The market has bottomed and mostly discounted abundant warehouse inventories,” William O’Neill, a partner at Logic Advisors in Upper Saddle River, New Jersey, said by e-mail. “I also see Chinese demand as underestimated and have seen recent evidence of Chinese interest. Funds are still mostly absent.”

Orders to withdraw copper from warehouses, or canceled warrants, were little changed at 64,625 tons after jumping 77 percent yesterday. Canceled warrants for zinc increased 21 percent to 718,850 tons today.

Aluminum, tin and nickel climbed in London.

To contact the reporter on this story: Agnieszka Troszkiewicz in London at atroszkiewic@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net

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