Industrial metals head for second weekly advance on U.S. rebound

Industrial metals headed for a second weekly advance in London on signs of a reviving economy in the U.S., the second-biggest consumer of copper and aluminum.

Retail sales rose the most in five months in February and the four-week average of jobless-benefit claims filings was the lowest since 2008, reports showed this week. Figures today will show U.S. industrial production gained for a third month in four in February, economists surveyed by Bloomberg said. Still, a stronger dollar and ample inventories may curb metals’ advance.

“It’s a bit of a tug of war for commodities,” Christin Tuxen, an analyst at Danske Bank A/S in Copenhagen, said by phone. “We’ve got fairly decent data out of the U.S., but that leads to strengthening of the dollar. For metals, it’s increasingly clear that you have quite a large stock overhang.”

The LME Index of the six main metals traded on the London Metal Exchange, updated daily based on closing prices, is up 1.1% this week. Copper for delivery in May gained 0.3% to $3.5455 a pound by 8:45 a.m. on the Comex in New York and the metal for delivery in three months added 0.3% to $7,821 a metric ton on the LME.

A stronger greenback discourages demand for commodities as an alternative investment. The dollar touched the highest level since August against a six-currency basket yesterday.

Copper inventories tracked by the LME are the highest since March 2010 and those of nickel and tin are up this year. Stockpiles of zinc and aluminum are near the highest levels since 1994 and at least 1979, respectively. Copper and aluminum stocks monitored by the Shanghai Futures Exchange are the highest in at least a decade, figures showed today.

LME copper inventories expanded for a 22nd session to 525,825 tons, daily exchange figures showed. Orders to draw copper from warehouses fell 0.6% to 33,050 tons, equating to 6.3% of the exchange’s total inventory of the metal.

Aluminum for delivery in three months on the LME rose 0.2% to $1,983 a ton. Japanese buyers agreed to pay near-record premiums to a global resources company for the April-to- June period. United Co. Rusal said it will halt output at its “deeply loss-making” Alscon smelter in Nigeria.

Nickel, zinc, tin and lead gained in London.

Bloomberg News

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