METALS-Econ outlook optimism sends copper to 4-mth high
Trade the News
Friday September 03, 2010 05:26:13 PM GMT
* Markets heartened by manufacturing data, jobs report looms
* U.S. jobless claims fell last week
* Coming up: U.S. July factory orders, pending home sales at 1400 GMT
(Updates prices, adds details)
By Humeyra Pamuk
LONDON, Sept 2 (Reuters) - Copper rose to its highest in more than four months on Thursday as recent economic data from the world's two largest economies, the United States and China, brightened the outlook for demand.
Following Wednesday's manufacturing data from the two big metal-consuming countries, investors felt more comfortable betting on riskier assets, which gave a boost to commodities.
Added to this, data on Thursday showed new U.S. claims for unemployment benefits fell last week, while the euro rose versus the dollar following comments from European Central Bank President Jean-Claude Trichet.
A stronger euro makes dollar-priced metals cheaper for European investors.
Copper for three-months delivery on the London Metal Exchange firmed to $7,650 a tonne at 1305 GMT compared with a close of $7,606 a tonne on Wednesday. It touched $7,680 a tonne earlier, its highest since April 27.
"It doesn't look as bad as it did before," said Jesper Dannesboe, senior commodity strategist at Societe Generale, referring to the economic outlook after strong Chinese and U.S. PMI data over the past couple of days.
"It looks like there's not going to be a double-dip recession, but maybe a period of slowdown of the recovery."
The positive data from the world's top two economies overcame a weak U.S. private sector payrolls number that the market largely ignored. However, the U.S. jobs market will swing back into focus on Friday with government jobs data for August.
"The manufacturing data was good, very good in fact, but the fact remains that without job creation, the U.S. economy isn't going anywhere very fast," a trader in Melbourne said.
"This is short-term euphoria built on shaky ground. The market is getting very excited about next year, with good cause, but it's running well ahead of fundamentals and it needs a healthy $400-$600 correction before we start to build a rally."
CAUTIOUS
Other data from key metal-consuming industries such as the auto sector was not rosy on Wednesday.
Automakers posted their weakest U.S. August sales in 27 years, underscoring uncertainty about the strength of the recovery in the world's largest economy.
In Europe, growth data looked upbeat, with gross domestic product in the 16-nation currency area expanding by 1.9 percent in the second quarter, compared with a previous reading of 1.7 percent.
But traders were reluctant to make big bets after recent rally. "It's overbought now," Dannesboe said.
Falling stocks continued to offer support for copper prices as inventories now stand at 399,000 tonnes, their lowest since November 2009, and cancelled warrants -- material earmarked for delivery -- account for 7.25 percent of the total stocks.
In other metals, LME nickel gained 2 percent to $21,515 a tonne, having hit $21,596 earlier, its highest since August 23, while lead was last at $2,173.25 a tonne versus Wednesday's $2,115 a tonne, having hit $2,180 earlier, its highest since Aug 10.
Zinc rose to $2,185.75 a tonne from $2,133, having hit a four month high of $2,194 earlier..
"The Chinese prefer to arb zinc rather than copper. The volumes some days are very strong," a Sydney trader said.
The differential between LME zinc and the Shanghai benchmark was open a fraction at around 100 yuan ($14.68) per tonne in favour of importing zinc, accounting for import duties and VAT. ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
For a graphic on the zinc and copper arbitrage, click: http://graphics.thomsonreuters.com/AS/0810/NT_20100209112849.jpg ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Tin traded at $21,525 from $21,450, and aluminium at $2,125 from $2,108, having hit $2,131 earlier, it's highest since Aug 19.
Metal Prices at 1308 GMT Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T Metal Last Change Percent Move End 2009 Ytd Percent
move COMEX Cu 348.20 0.95 +0.27 334.65 4.05 LME Alum 2119.00 11.00 +0.52 2230.00 -4.98 LME Cu 7646.00 40.00 +0.53 7375.00 3.67 LME Lead 2167.00 52.00 +2.46 2432.00 -10.90 LME Nickel 21465.00 415.00 +1.97 18525.00 15.87 LME Tin 21375.00 -75.00 -0.35 16950.00 26.11 LME Zinc 2181.00 48.00 +2.25 2560.00 -14.80 SHFE Alu 15540.00 65.00 +0.42 17160.00 -9.44 SHFE Cu* 59920.00 420.00 +0.71 59900.00 0.03 SHFE Zin 17685.00 280.00 +1.61 21195.00 -16.56 ** Benchmark month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07
(Editing by Jane Baird)
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