By Anna Stablum

March 10 (Bloomberg) -- Copper advanced for a second day in New York and London as shipments to China rose by 10 percent in February compared with the previous month, signaling sustained demand from the world’s largest user.

China imported 322,282 metric tons of copper and copper products last month, the Beijing-based customs office said today. That was 2 percent less than the same month a year ago, according to data compiled by Bloomberg. A price difference between the contracts traded in Shanghai and London had favored imports and this gap has now closed, Leon Westgate, a Standard Bank Plc analyst in London, said by phone.

“Chinese copper imports were more or less as expected, reflecting the arbitrage seen in late December through January,” he said. They still “helped shore up confidence.”

Copper for May delivery gained 1.2 cents, or 0.4 percent, to $3.4235 a pound at 8:11 a.m. on the Comex in New York. Copper for three-month delivery rose 0.5 percent to $7,545.25 a ton on the London Metal Exchange.

Record imports of copper into China in the first half of 2009 helped prices to more than double last year. This year LME copper prices have risen 2.3 percent.

Chinese buyers are “sitting on the sidelines,” Westgate said. Arbitrage is where investors attempt to profit from price disparities for the same asset in different markets. Copper futures in London gained 9 percent last month, compared with an increase of about 11 percent on the Shanghai Futures Exchange.

Cue From Dollar

Demand will increase in the second quarter of this year and then weaken in the second half, Westgate said. Copper for immediate delivery may average $7,375 a ton this year, rising to $7,900 a ton in 2011 as supply falls behind demand, he said.

In 2009 spot copper averaged $5,169.41. The market is forecast to record a surplus of 125,000 tons this year, down from a surplus of 475,000 last year, Westgate said.

Next year the market will move into a deficit of 255,000 tons, he said. In the short-term, copper will take its cue from the dollar, equity markets and technical charts, he added.

The U.S. Dollar Index, a six-currency gauge of the greenback’s strength, was little changed after rising as much as 0.3 percent today. A stronger dollar makes metals priced in the currency more expensive for holders of other monies. The MSCI World Index of stocks was little changed and is up less than a percent this year. Last year equities rose 27 percent on signs of a global economic recovery.

Aluminum Imports Drop

Stockpiles of copper in LME-monitored warehouses fell for a sixth day, the longest declining streak since July 2009, to 538,175 tons. Metal booked for delivery rose 2.3 percent, after falling for four consecutive days, to 27,325 tons.

Aluminum for three-month delivery on the LME fell 0.1 percent to $2,256 a ton. Chinese imports of aluminum and its products fell 34 percent in February, a third monthly drop in a row, according to Chinese customs data.

“China’s demand is weakening,” Eugen Weinberg, an analyst at Commerzbank AG in Frankfurt, said in a report today. “Hence, imports representing a crucial demand component should lose influence and support for aluminium prices should diminish.”

Nickel eased 1.2 percent to $21,975 a ton, while tin advanced 0.8 percent to $17,690 a ton. Zinc rose 0.2 percent to $2,379 a ton and lead climbed 2.7 percent to $2,306 a ton.

--With assistance from Glenys Sim in Singapore. Editors: Tony Barrett, John Deane.

To contact the reporter on the story: Anna Stablum in London at astablum@bloomberg.net.

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

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