Tuesday, 11 December 2012 01:32
LONDON: Copper hit its highest price in almost two months on Monday as investors took heart from rising factory output growth in top consumer China, although data also showed Chinese exports and imports were below forecasts, tempering the metal's gains.
Also restraining the rise in copper was news of Italian Prime Minister Mario Monti's surprise decision to resign early, raising political risk in a country that remains a focus of the euro zone debt crisis.
Three-month copper on the London Metal Exchange closed up 1.3 percent at $8,140 a tonne, extending a small gain from the previous session, when it logged a fourth week of gains.
Prices earlier hit $8,159 a tonne, the highest since Oct. 19.
China's copper imports rose 13.5 percent in November from the previous month but the figure was boosted by the arrival of delayed shipments after a week-long holiday, meaning overall demand remained weak.
"The Chinese macro data was relatively good with a slight uptick in terms of industrial production, investment etc. and although the copper numbers were not particularly good themselves I think the sentiment is starting to turn a little bit," Standard Chartered analyst Daniel Smith said.
"Our clients are turning somewhat more bullish from what we see, covering short positions. In the short term we are probably going to go higher but I don't see that much upside given the wider backdrop," he added, underlining that copper stocks were still very high in China.
China data at the weekend showed both industrial output and retail sales rose in November at their fastest annual pace in eight months, while on Monday figures showed China's exports growth slowed sharply to a much lower than expected 2.9 percent in November.
The weak export numbers illustrate the drag on the revival in the Chinese economy as its major buyers struggle - Europe and Japan with recession and the United States with a sluggish recovery.
Recent US data, however, has shown improvement in housing and jobs, though apprehension is setting in again ahead of the year-end US "fiscal cliff" deadline, when automatic government spending cuts and tax rises will be enacted unless Republicans and Democrats reach a deal.
Supporting the industrial metals outlook, South Korea, the world's fourth biggest base metals buyer, will raise purchases by its state-run procurement agency (PPS) by 20 percent in 2013, an agency official said on Monday.
The PPS also said it would list a 1,100-tonne copper commodity exchange traded fund (ETF) worth $10 million on South Korea's stock exchange on Dec. 17.
Looking ahead, copper should get some support from a US Federal Reserve meeting on Tuesday and Wednesday, at which many economists expect the central bank will announce monthly bond purchases of $45 billion.
The move would signal the Fed's willingness to continue pumping money into the US economy during 2013 in a bid to bring down unemployment.
Back in China meanwhile, Barclays Capital said it expects copper demand to remain soft and that the country will export more metal next year, perhaps averaging 10,000 to 15,000 tonnes per month.
"This week has seen further incremental Chinese data improve, but concerns remain over the potential for a copper surplus in 2013 and the ability of miners to balance growth and shareholder return in the current environment," Macquarie analysts said in a note.
In other metals traded, soldering metal tin, untraded in rings, was last bid at $23,090 a tonne, up more than five percent from a close of $21,775 on Friday. Earlier it hit its highest in almost eight months at $23,120.
Zinc, used in galvanizing, closed almost 3 percent up at $2,085 a tonne, having hit a two-month high earlier of $2,092.25 a tonne.
Battery material lead closed up almost 4 percent at $2,298 having earlier hit a two-month high of $2,303 a tonne earlier.
Aluminium, untraded in rings, was last bid at $2,131. It hit a session high of $2,138, its highest in more than two months.
Stainless-steel ingredient nickel closed up more than 3 percent at $17,775 a tonne, having hit a 2-month high of $17,867.
Center>Copyright Reuters, 2012