SINGAPORE, Sept 2: London copper rallied more than 2 percent on Monday after data showed China’s manufacturing sector expanding at the fastest pace in more than a year, burnishing the near term outlook for metals demand.
Surveys on China’s factory sector raised hopes that a rapid economic slowdown in the world’s second-largest economy may have been arrested. China is the world’s top consumer of metals, accounting for around 40 percent of refined copper demand.
A private sector report showed that China’s factory activity expanded for the first time in four months in August, while An official report at the weekend showed activity grew at the fastest pace in more than a year with a jump in new orders.
‘Copper is doing relatively well, reflecting a bit of positivity coming out of the Chinese economy,’ said Tim Radford at Sydney based adviser Rivkin.
‘But I think it’s a short term blip – there’s no real catalyst for the Chinese economy to recover, while there’s an overhang of concerns out there about emerging market economies and tapering that could weigh on global growth.’
Three-month copper on the London Metal Exchange had climbed 2 percent to $7,238.50 a tonne by 0313 GMT, reversing losses from the previous session when it fell 0.8 percent.
Copper gained 3.2 percent in August, its biggest monthly rise since May. Prices hit a three-week low of $7,081.50 a tonne on Friday.
The most-traded December copper contract on the Shanghai Futures Exchange climbed 1 percent to 52,400 yuan ($8,600) a tonne.
Investors grew slightly less optimistic on copper last week. Hedge funds and money managers cut bets in futures and options of U.S. Copper markets for the week ended Aug 27, a report by the Commodity Futures Trading Commission showed on Friday.
Reflecting lower physical demand from China, premiums fell $5 from Friday to $160-$190 according to China based price provider Shmet. (http://www.Shmet.Com/)
‘The past week has finally seen sustained downward pressure on the complex,’ said Barclays in a research note.
‘We expect this trend to be sustained based on a combination of now neutral positioning and expectation for broad softening in fundamental conditions in Q4 – driven by stronger supply growth and a moderation in Chinese growth … We view aluminium and copper as the most attractive shorts at current prices.’
PRICES
Base metals prices at 0313 GMT
Metal Last Change Pct Move YTD pct chg
LME Cu 7238.50 143.50 +2.02 -8.71
SHFE CU FUT DEC3 52400 540 +1.04 -9.15
HG COPPER DEC3 3.29 0.06 +1.82 -99.10
LME Alum 1825.75 12.75 +0.70 -11.84
SHFE AL FUT DEC3 14285 00 +0.00 -6.91
LME Zinc 1920.00 15.00 +0.79 -6.95
SHFE ZN FUT DEC3 14920 -625 -4.02 -4.02
LME Nickel 13875.00 75.00 +0.54 -19.12
LME Lead 2175.00 23.50 +1.09 -7.05
SHFE PB FUT 14700.00 0.00 +0.00 -3.61
LME Tin 21101.00 -124.00 -0.58 -9.82
LME/Shanghai arb^ -678
($1 = 6.1195 Chinese yuan)
(agencies)
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