Copper Gains on China Economic Outlook, Dollar's Fall-Shanghai Metals Market

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Copper Gains on China Economic Outlook, Dollar's Fall

Industry News 09:48:01AM Nov 23, 2012 Source:SMM

LONDON, Nov 22 (Reuters) - Copper rose on Monday after a manufacturing survey from top consumer China boosted optimism about the pace of economic recovery, with a weaker dollar against the euro also helping to lift metals prices.

Three-month copper on the London Metal Exchange closed at $7,715 a tonne, from $7,692 at the close on Wednesday. Trading volumes were light due to the Thanksgiving holiday in the United States.

In the LME rings, activity was also dampened after Barclays decided to quit floor trading and move all base metals operations to its electronic platform.
 
Copper has struggled over the past two months to break a downtrend, giving up 8 percent since touching a peak of $8,422 on Sept. 19.

It surged on Monday in the biggest daily gain in two months on hopes for a solution to the U.S. fiscal cliff problem of $600 billion tax hike and spending cuts that are due to roll in early next year, but then lost momentum.

Investors took heart on Thursday when preliminary results from a factory survey showed that expansion in China's manufacturing sector accelerated in November for the first time in 13 months, a sign that the pace of economic growth has revived after seven consecutive quarters of slowdown.
  
"Any support for copper today will have quite a lot to do with China  ... it was another data point that suggests that, at last, things are starting to get better," said Nic Brown, head of commodities research at Natixis. 

Analyst Janet Kong at China International Capital Corporation said copper consumption was expected to gradually improve. "We expect supply-side pressure to remain in the near term before a more significant pickup in demand, probably in 2Q13," she said in a note.

"Overall, we forecast China's copper consumption to grow 4.1 percent in 2012 and improve to 4.9 percent in 2013 on better economic growth and destocking coming to an end."

The Chinese report followed data on Wednesday showing U.S. manufacturing grew in November at its quickest pace in five months, with a rise in domestic demand hinting that factories could provide a boost to economic growth in the fourth quarter.

Also helping to lift prices was a strong euro, which rose on expectations a Greek funding deal would eventually be agreed and after data showed manufacturing activity in the euro zone slowed less than expected in November. It hit a two-week high against the dollar.

A weak dollar makes commodities priced in the U.S. unit cheaper for holders of other currencies.

Brown at Natixis said he expected copper prices to rise further in 2013, partly due to positive signs in the U.S. housing market.

"Our forecast for copper prices expect an average of about $8,500 a tonne in 2013. We would expect a peak in prices in the first half of the year since supply will gradually improve as we get closer to 2014," Brown added.

Investors Pull Back
Open interest in most LME metals has declined in recent days as uncertainty and lack of strong direction curbs investor appetite.

One of the biggest moves has been in zinc, where open interest jumped 15 percent in the month up to Nov. 16, but over the past week has slid 7.3 percent to 288,069 lots.

Open interest in aluminium has shed about 9 percent since the start of the month.

In trading, three-month aluminium closed at $1,944.5 a tonne from $7,692 and zinc at $1,925 from $1,917.

Battery material lead closed at $2,165 a tonne from $2,150 and stainless steel ingredient nickel at $16,550 from $17,000. Soldering metal tin, untraded in rings, was bid at $20,455 from $20,425.
   
 Metal Prices at 1707 GMT
 Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T
  Metal            Last      Change  Pct Move   End 2011   Ytd Pct
                                                              move
  COMEX Cu       350.05        0.45     +0.13     344.75      1.54
  LME Alum      1942.75       12.75     +0.66    2020.00     -3.82
  LME Cu        7715.50       23.50     +0.31    7600.00      1.52
  LME Lead      2163.25       13.25     +0.62    2034.00      6.35
  LME Nickel   16545.00     -455.00     -2.68   18650.00    -11.29
  LME Tin      20460.00       35.00     +0.17   19200.00      6.56
  LME Zinc      1923.50        6.50     +0.34    1845.00      4.25
  SHFE Alu     15335.00       30.00     +0.20   15845.00     -3.22
  SHFE Cu*     56040.00      140.00     +0.25   55360.00      1.23
  SHFE Zin     14995.00       45.00     +0.30   14795.00      1.35
 ** Benchmark month for COMEX copper
 * 3rd contract month for SHFE AL, CU and ZN
 SHFE ZN began trading on 26/3/07
 

Copper Gains on China Economic Outlook, Dollar's Fall

Industry News 09:48:01AM Nov 23, 2012 Source:SMM

LONDON, Nov 22 (Reuters) - Copper rose on Monday after a manufacturing survey from top consumer China boosted optimism about the pace of economic recovery, with a weaker dollar against the euro also helping to lift metals prices.

Three-month copper on the London Metal Exchange closed at $7,715 a tonne, from $7,692 at the close on Wednesday. Trading volumes were light due to the Thanksgiving holiday in the United States.

In the LME rings, activity was also dampened after Barclays decided to quit floor trading and move all base metals operations to its electronic platform.
 
Copper has struggled over the past two months to break a downtrend, giving up 8 percent since touching a peak of $8,422 on Sept. 19.

It surged on Monday in the biggest daily gain in two months on hopes for a solution to the U.S. fiscal cliff problem of $600 billion tax hike and spending cuts that are due to roll in early next year, but then lost momentum.

Investors took heart on Thursday when preliminary results from a factory survey showed that expansion in China's manufacturing sector accelerated in November for the first time in 13 months, a sign that the pace of economic growth has revived after seven consecutive quarters of slowdown.
  
"Any support for copper today will have quite a lot to do with China  ... it was another data point that suggests that, at last, things are starting to get better," said Nic Brown, head of commodities research at Natixis. 

Analyst Janet Kong at China International Capital Corporation said copper consumption was expected to gradually improve. "We expect supply-side pressure to remain in the near term before a more significant pickup in demand, probably in 2Q13," she said in a note.

"Overall, we forecast China's copper consumption to grow 4.1 percent in 2012 and improve to 4.9 percent in 2013 on better economic growth and destocking coming to an end."

The Chinese report followed data on Wednesday showing U.S. manufacturing grew in November at its quickest pace in five months, with a rise in domestic demand hinting that factories could provide a boost to economic growth in the fourth quarter.

Also helping to lift prices was a strong euro, which rose on expectations a Greek funding deal would eventually be agreed and after data showed manufacturing activity in the euro zone slowed less than expected in November. It hit a two-week high against the dollar.

A weak dollar makes commodities priced in the U.S. unit cheaper for holders of other currencies.

Brown at Natixis said he expected copper prices to rise further in 2013, partly due to positive signs in the U.S. housing market.

"Our forecast for copper prices expect an average of about $8,500 a tonne in 2013. We would expect a peak in prices in the first half of the year since supply will gradually improve as we get closer to 2014," Brown added.

Investors Pull Back
Open interest in most LME metals has declined in recent days as uncertainty and lack of strong direction curbs investor appetite.

One of the biggest moves has been in zinc, where open interest jumped 15 percent in the month up to Nov. 16, but over the past week has slid 7.3 percent to 288,069 lots.

Open interest in aluminium has shed about 9 percent since the start of the month.

In trading, three-month aluminium closed at $1,944.5 a tonne from $7,692 and zinc at $1,925 from $1,917.

Battery material lead closed at $2,165 a tonne from $2,150 and stainless steel ingredient nickel at $16,550 from $17,000. Soldering metal tin, untraded in rings, was bid at $20,455 from $20,425.
   
 Metal Prices at 1707 GMT
 Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T
  Metal            Last      Change  Pct Move   End 2011   Ytd Pct
                                                              move
  COMEX Cu       350.05        0.45     +0.13     344.75      1.54
  LME Alum      1942.75       12.75     +0.66    2020.00     -3.82
  LME Cu        7715.50       23.50     +0.31    7600.00      1.52
  LME Lead      2163.25       13.25     +0.62    2034.00      6.35
  LME Nickel   16545.00     -455.00     -2.68   18650.00    -11.29
  LME Tin      20460.00       35.00     +0.17   19200.00      6.56
  LME Zinc      1923.50        6.50     +0.34    1845.00      4.25
  SHFE Alu     15335.00       30.00     +0.20   15845.00     -3.22
  SHFE Cu*     56040.00      140.00     +0.25   55360.00      1.23
  SHFE Zin     14995.00       45.00     +0.30   14795.00      1.35
 ** Benchmark month for COMEX copper
 * 3rd contract month for SHFE AL, CU and ZN
 SHFE ZN began trading on 26/3/07