Thu Jul 19, 2012 1:05pm EDT
* China house prices up in June, shows policy traction * U.S. existing home sales falls in June, jobless claims rise (Adds closing prices) By Eric Onstad and Maytaal Angel LONDON, July 19 (Reuters) - Copper hit a two-week high on Thursday, bolstered by expectations that China could announce further monetary easing measures in the second half and by strong corporate earnings which led global equity markets higher, boosting investor sentiment. Equities, seen by some as a proxy for global growth, were higher in the U.S. and Europe, offsetting some recent gloomy economic data and boosting copper. China's Premier Wen Jiabao said the government needed to step up efforts to create more jobs given that the job market could turn for the worse. The comments sparked hopes for more policy easing, with some in the market betting on announcements this weekend. Limiting gains in copper though, the euro weakened versus the dollar as Germany warned Spain's financial troubles were far from over and its government should be ultimately responsible for European aid to its banks. A weak euro makes dollar-priced metals costly for European investors. Three-months copper on the London Metal Exchange touched an intraday peak of $7,813 per tonne, its highest since July 3. It ended at $7,735, up 1.28 percent on the day, and heading for its second straight week of gains. The metal is up just 2 percent this year however, having dropped sharply in the second quarter amid concerns over Europe's debt crisis, slower growth in China and a stalling recovery in the U.S. "The premier said some positive things but I'm not convinced they're going to do a huge amount until after the Chinese new year when the new premier starts," said Citi analyst David Thurtell. "I think at $7,800 you'll see (copper) producers selling, which will cap the rally. The fact that Shanghai stocks are rising, premiums are falling and Chinese production has stepped up suggests there's reasonable amounts of metal still in China." China accounts for some 40 percent of global copper consumption. Also weighing on copper, U.S. data out earlier showed existing home sales dropped 4.5 percent last month, compared with forecasts for a 1.1 percent rise. Meanwhile U.S. jobless claims rose last week to levels consistent with only modest jobs growth. Investors kept their hopes pinned on China, however, mindful of the premier's comments and of Wednesday's data which showed China's home prices broke eight straight months of decline to rise in June. "The markets seem to be focusing on expectations that the Chinese authorities will now accelerate policies to rev up their economy. However, we have our doubts that renewed government 'pump-priming' is going to do the trick, especially when most of China's trading partners remain mired in recession or near recessionary levels," said INTL FCStone in a note. INVESTMENTS IN INFRASTRUCTURE Chinese traders hope infrastructure investments in the next few months will prop up demand. According to media reports, China's big four state banks doubled their pace of lending in the first half of July from a month ago in part due to a pickup in borrowing by government-led investment schemes. In physical markets in China however, traders said copper sales were much lower compared with a year ago. "In the copper downstream markets, there is a slight pick-up in state grid construction, but these are still too weak now to boost overall demand," said an analyst with a trading firm. Traders added that lead is one of the strongest base metals in the Chinese market now due to a surge in battery production this year. "From the statistics we've gathered, China's battery sales this year up to the end of May rose by 12 percent -- a big boost to lead sales. Despite this, prices have been pressured by macroeconomic uncertainties," said an analyst with an international trader. LME lead, which has shed 6 percent so far this year, ended up 1.02 percent at $1,929.50 a tonne, while nickel dipped 0.31 percent to close at $16,050 a tonne. Analyst Andrew Keen at HSBC in London cut his 2012 forecast for nickel by 10 percent to $18,030 a tonne, but said the market may temporarily tighten later in the year. "We still expect the market to remain in marginal surplus of 8,000 tonnes, but now believe that nickel production cuts, including Chinese NPI (nickel pig iron) and delays in the ramp-up of new projects may actually push the market in a temporary deficit in 4Q12 or 2013," he said in a note. The global nickel market was in supply surplus by 27,000 tonnes in the first five months of 2012, the latest monthly bulletin from Lisbon-based International Nickel Study Group showed. Aluminium ended up 1.83 percent at $1,944 a tonne, zinc increased 0.96 percent to close at $1,887 and tin climbed 1.57 percent to end at $19,095 a tonne. Metal Prices at 1442 GMT Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T Metal Last Change Pct Move End 2009 Ytd Pct move COMEX Cu 352.80 5.45 +1.57 334.65 5.42 LME Alum 1943.00 34.00 +1.78 2230.00 -12.87 LME Cu 7725.00 88.00 +1.15 7375.00 4.75 LME Lead 1929.00 19.00 +0.99 2432.00 -20.68 LME Nickel 16050.00 -50.00 -0.31 18525.00 -13.36 LME Tin 19090.00 290.00 +1.54 16950.00 12.63 LME Zinc 1886.50 17.50 +0.94 2560.00 -26.31 SHFE Alu 15615.00 50.00 +0.32 17160.00 -9.00 SHFE Cu* 56230.00 410.00 +0.73 59900.00 -6.13 SHFE Zin 14830.00 45.00 +0.30 21195.00 -30.03 ** Benchmark month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07 (Editing by William Hardy and James Jukwey)
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