By Chanyaporn Chanjaroen Feb. 17 (Bloomberg) -- Copper rose to a three-week high in London on speculation that increased bookings to remove metal from inventories may signal stronger demand from China, the world’s biggest consumer. Canceled warrants, as the bookings are known, climbed to 16,900 metric tons, the London Metal Exchange said today in a daily report. That’s up more than sixfold from the end of 2009. Asian warehouses registered with the LME account for almost two- thirds of total bookings. “Chinese demand will increase,” Robin Bhar, an analyst at Credit Agricole SA’s Calyon unit in London, said today by phone. “You can see that from canceled warrants. Fundamentals look favorable for prices to gain.” Copper for three-month delivery rose $28, or 0.4 percent, to $7,172 a ton at 9:55 a.m. on the LME. Prices climbed as high as $7,240, the highest intraday level since Jan. 27. Copper for May delivery gained 0.5 percent to $3.2555 a pound on the New York Mercantile Exchange’s Comex unit. Chinese traders are likely to buy more copper when they return next week, Bhar said. Markets in the country are closed this week during the Lunar New Year holiday. Copper inventories monitored by the LME were unchanged at 549,900 tons today, the highest since October 2003. Including stockpiles monitored by the Shanghai Futures Exchange and Comex, they total 761,837 tons. Chinese Demand The inventories are a “worrying” sign for Chinese copper demand, Chilean Mining Minister Santiago Gonzalez said. The South American country is the world’s biggest producer of the metal, used in electrical gear and construction. “Disproportionate stocks might cause prices to fall,” Gonzalez told reporters in Santiago yesterday. “Something is going on in the international market.” Nickel for three-month delivery rose as high as $20,589 a ton, the highest since Aug. 14, on the LME and was last down 0.9 percent at $20,306 a ton. Stockpiles monitored by the exchange dropped 0.2 percent to 164,478 tons, the fourth consecutive decline. Still, they remain close to the highest since at least 1980, when Bloomberg records began. “We’re not convinced that nickel is worth $20,000,” David Thurtell, an analyst at Citigroup Inc. in London, wrote in a report yesterday. “Stocks both on and off exchanges are high, and Chinese nickel pig iron production is strong and rising.” Chinese steelmakers use so-called nickel pig iron as an alternative to refined metal in production. The country is the world’s largest consumer of nickel. Aluminum dropped 0.4 percent to $2,122 a ton and lead added 0.9 percent to $2,318 a ton. Zinc fell 0.9 percent to $2,315 a ton and tin was little changed at $16,699 a ton. --With assistance from Matthew Craze in Santiago. Editors: Dan Weeks, Claudia Carpenter. To contact the reporter on this story: Chanyaporn Chanjaroen in London at +44-20-7073-3544 or cchanjaroen@bloomberg.net To contact the editor responsible for this story: Stuart Wallace at +44-20-7673-2388 or swallace6@bloomberg.net

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