Copper Climbs as Banks Project Stronger Chinese Economic Growth

Copper rose in London as signs of a rebounding economy in China, the world’s biggest consumer of the metal, prompted banks to increase growth estimates.

China’s economy will expand 7.6 percent this year, UBS AG said, above the prior 7.5 percent forecast. Deutsche Bank AG boosted projections for the current and next quarters. China’s broadest measure of new credit almost doubled on the month in August, the central bank said yesterday, after separate figures showed industrial production gained the most in 17 months.

“People are starting to get more positive on China, which clearly implies stronger demand for commodities,” Nic Brown, head of commodities research at Natixis SA in London, said by e-mail today. “Industrial production surprised on the upside.”

Copper for delivery in three months advanced 0.4 percent to $7,201 a metric ton by 9:59 a.m. on the London Metal Exchange. The metal for delivery in December rose 0.6 percent to $3.2805 a pound on the Comex in New York.

“Our base-case outlook remains for solid but unspectacular global copper demand growth,” analysts at Goldman Sachs Group Inc. said in an e-mailed report.

Brown at Natixis also pointed to a surging Baltic Capesize Index, a measure of rates for the largest ships that carry iron ore, a steelmaking raw material. China is the biggest global steel producer and importer of the ore.

The gauge almost doubled this month to the highest since December 2011, “a clear indicator to me that Chinese demand is beginning to improve,” Brown said.

Gains for metals may be limited amid speculation the Federal Reserve will reduce economic stimulus in the U.S., the second-biggest copper user, when its policy-making committee meets next week. The Fed will cut its monthly bond-buying by $10 billion to $75 billion at the Sept. 17-18 meeting, economists said in a Bloomberg survey last week.

Copper stockpiles monitored by the LME dropped for a fifth session to 585,275 tons, daily exchange data showed. Orders to draw the metal from warehouses fell 1.1 percent to 286,975 tons.

Aluminum, tin, zinc, lead and nickel rose 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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