Copper up 1% as Market Remains Bullish; Data Eyed

SHANGHAI, June 29 -- London copper rose 1 percent on Monday, supported by lower stocks and increasing open interest, while Shanghai copper steadied after 4 straight days of gains.

    Although the copper demand outlook remains grim for the summer, the traditional low season, inventories in warehouses registered with the London Metal Exchange continue to fall, and open interest has increased in recent weeks thanks to the building of new long positions.

    Investors are eyeing a flood of economic data this week, including China's Purchasing Managers Index on Wednesday, U.S. consumer confidence on Tuesday and U.S. June job figures and manufacturing data on Thursday to gauge if the economy is on a path to sustainable recovery.

    "In the short term, copper may still move up to test previous highs, but the attempt is only supported by technical indicators, such as growing open interest, falling stocks and the strength in the rebound last week," said Zeng Chao, an
analyst with Everbright Futures.

    Copper for three-month delivery on the London Metal Exchange MCU3 rose 1 percent to $5,090 a tonne by 0217 GMT, after touching $5,125.

    Shanghai's benchmark third-month copper futures contract SCFc3 gained 10 yuan to 40,400 yuan.

    Shanghai's copper stocks fell 18 percent last week to 56,088 tonnes -- enough to supply Chinese demand for about 4.5 days. LME stocks also dipped, shedding 1,350 tonnes to 270,250 tonnes, their lowest since mid-November, and equivalent to around 5.5 days of world consumption.

    But some questioned whether the strength in copper could be sustained, given uncertainties over the economy.

    "I think there will be very limited movement in prices this week, until we see the data," said David Moore, commodities strategist at the Commonwealth Bank.

    Sentiment may also soften as China's copper imports, which hit successive record highs in previous months due to high domestic prices, are stopping at the border after a collapse in Shanghai's premium over world market prices.

    LME aluminium MAL3 shed $2 to $1,645 a tonne. LME inventories of the metal, used in packaging and transport, jumped 20,500 tonnes on Friday to approach a record high near 4.4 million tonnes.

    Shanghai zinc SZNc3 fell 0.4 percent to 13,495 yuan a tonne, and LME zinc MZN3 rose nearly 1 percent to $1,595 a tonne.

    "The fundamentals of zinc have improved a bit, thanks to the recovery in the steel sector which has pushed up prices of galvanised plate," said Zeng of Everbright Futures.

    "But supply has also increased as zinc smelters return to production."

    (Source: Reuters)