By Leia Michele Toovey- Exclusive to Copper Investing News

Copper climbed the most in over a week as dropping inventories signaled rising demand for the red metal. A huge drawdown in London Metal Exchange inventories provided the strongest boost to copper. Stockpiles monitored by the London Metal Exchange tumbled 2.4 per cent to 480,400 metric tonnes, the biggest one-day drop since October 21. Adding to improved demand prospects were cancelled warrants, which fell to 57,525 tonnes from 66,700 tonnes the session before, but above 29,375 tonnes at the end of March. On the LME, copper for delivery in three months climbed $120, or 2.6 per cent, to $4,819 a tonne. The price is still far off the record $8,940 hit on July 2 2008.  

Copper futures for July delivery climbed 3.8 per cent, to $2.209 a pound on the New York Mercantile Exchange’s Comex division. U.S. copper futures settled with strong gains on Wednesday, shoved higher by an enormous drawdown in warehouse stocks as signs of economic stability renewed hopes for a swift recovery of the economy. Copper for May delivery settled with a 3.97 per cent rise at $2.1990 a lb on the New York Mercantile Exchange’s COMEX division.

May futures fell short of the $2.2350 a lb peak, dating back to October 15, reached on Tuesday.  After-market prices extended gains up to $2.2340 after the Federal Reserve’s Beige Book report showed hints of economic bottoming. COMEX copper stocks were barely moved with a 20 short tonne increase to 47,435 short tonnes on Tuesday. Some copper buyers sought the red metal because of shortages in China where spot prices continue to outpace forward rates.

Commenting on copper’s recent rally, Michael Cuggino, the chief executive officer of Pacific Heights Asset Management LLC, stated “What’s happening in copper now is a reflection of the broader global economic story.” We’re still expecting to see long-term global growth that’s going to drive demand for copper and the other commodities,” he said yesterday in an interview in New York.” Still, stagnant U.S. economic growth may limit copper’s gains,” said Gijsbert Groenewegen a partner at Gold Arrow Capital Management.

Industrial production in the world’s largest economy fell 1.5 per cent in March, the fourteenth drop in the past 15 months, as factories trimmed unwanted stockpiles, the Federal Reserve reported today.

Company News

African Copper Plc, a company exploring for the metal in Botswana,  received an unsolicited offer of finance from Zambia Copper Investments Ltd (ZCI). ZCI proposes buying 676.6 million new shares of African Copper, raising $9.9 million. The completion of the transaction would give ZCI a 70 per cent stake in African Copper. African Copper said that they will not respond to the Zambia Copper Investments until the company’s shareholders and management discuss the opportunity at an upcoming extraordinary general meeting

Zambia, already Africa’s top copper producer, has found more deposits in its north and will invite foreign firms to conduct further feasibility studies prior to mining, a minister said on Wednesday. Mines and Minerals Development Minister Maxwell Mwale said more copper and manganese had been discovered in Luapula province, which borders the Democratic Republic of Congo (DRC), and the government had already issued some licenses for the mining of manganese. “We are trying to impress as many mining companies (as possible) to invest in Luapula province. We have huge resources and the prospects of mining are very bright,” Mwale said.

Mwale said Zambia planned to geologically map 45 per cent of the country where there was mineral wealth in order to invite more investors into mining. The potential (for more discoveries) of minerals is very high. Copper mining is the economic lifeblood of this southern African country.

Contained copper production at Chile’s Escondida mine, the world’s largest, slumped 45 per cent in the first quarter from a year ago to 156,400 tonnes, part owner Rio Tinto Ltd said on Wednesday. Ore grades at the mine, which produced 1 million tonnes or just fewer than 5 per cent of global copper output last year, dropped to 0.92 per cent from 1.56 per cent, although Rio said grades should recover. “Grades are expected to recover over the course of 2009 to closer to the 2008 average,” Rio said.

Fortunately for Rio, the decline at Escondida was offset by gains at other operations. The Grasberg mine in Indonesia saw output in the first quarter jump to 201,100 tonnes from 100,800 tonnes in the same period last year. Copper-in-concentrate output at Bingham Canyon in the United States rose by two thirds to 74,700 tonnes in the first quarter. Copper cathode output from Rio’s Kennecott operations was 68,700 tonnes in the first three months from 52,100. In Australia, the output at Northparkes rose 46 per cent to 23,500 tonnes.