Fri Jul 20, 2012 12:55am IST
* Copper up as Wen's comments spur easing hopes in China * Upside capped by weak U.S. economic data * Copper scrap demand seen after price sell-off * Coming up: U.S. Commitments of Traders report Friday (Recasts, updates comment, market activity, changes byline, dateline, previously LONDON) By Frank Tang and Chris Kelly NEW YORK, July 19 (Reuters) - Copper rose to a two-week high on Thursday, gaining almost 2 percent on expectations that China could announce further monetary easing and better economic sentiment amid rallies in commodities led by crude oil. Copper, seen by some as a barometer for the health of the global economy, was lifted by a nearly 3 percent jump in Brent crude oil prices on Middle East supply worries and gains in U.S. and European equity markets. The red metal received a boost after 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. Wen's comments sparked hopes for more monetary policy easing, with some in the market betting on announcements this weekend. 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. U.S. COMEX copper futures for September delivery settled up 6.05 cents at $3.5345 a lb, after hitting a high at $3.545, the highest price since July 3. Trading volume was heavy during Thursday's rally at 40 percent above its 250-day average, preliminary Reuters data showed. Traders now look forward to Friday's U.S. Commitments of Traders report which will show managed money's net length in the copper market. 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. Citi analyst David Thurtell said rising Shanghai warehouse stocks, falling premiums stepped-up Chinese production suggest there is a reasonable amount of copper still in China. China accounts for some 40 percent of global copper consumption. Also capping copper's gains was data showing the U.S slowdown in the U.S. economy persisted early in the third quarter with factory activity in the U.S. Mid-Atlantic region contracting in July for a third straight month and new claims for jobless aid surging last week. "The data wasn't particularly encouraging, so this certainly is not a data-led rally," said Bill O'Neill, partner of LOGIC Advisors. "In general, copper is being helped by a little bit more of a risk-on mentality we are seeing in commodities, but...the macro picture does not justify significant upside," O'Neill said. Freeport-McMoRan Copper & Gold Inc, the world's No. 1 copper producer, said it planned to increase copper production by 25 percent over the next three years through several mine expansions. CHINESE INFRASTRUCTURE INVESTMENTS 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. Catherine Virga, senior base metals analyst with CPM Group, said that there is solid scrap demand in terms of both buying for consumption and restocking at current price levels after a sell-off earlier this year. Meanwhile, some traders said that lead is one of the strongest base metals in the Chinese market now due to a surge in battery production this year. 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. In other base metals, 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 2:04 p.m. EDT (1804 GMT) Metal Last Change Pct Move End 2011 Ytd Pct move COMEX Cu 352.85 5.45 +1.57 343.60 2.69 LME Alum 1943.00 34.00 +1.78 2020.00 -3.81 LME Cu 7725.00 88.00 +1.15 7600.00 1.64 LME Lead 1929.00 19.00 +0.99 2035.00 -5.21 LME Nickel 16050.00 -50.00 -0.31 18710.00 -14.22 LME Tin 19090.00 290.00 +1.54 19200.00 -0.57 LME Zinc 1886.50 17.50 +0.94 1845.00 2.25 SHFE Alu 15615.00 50.00 +0.32 15845.00 -1.45 SHFE Cu* 56230.00 410.00 +0.73 55360.00 1.57 SHFE Zin 14830.00 45.00 +0.30 14795.00 0.24 ** Benchmark month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07 (Additional reporting by Eric Onstad and Maytaal Angel in London; Editing by William Hardy, James Jukwey and Sofina Mirza-Reid)
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