METALS-Copper bounces back on Greece hopes, caution stays

Fri Feb 17, 2012 2:51am EST

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* LME copper snaps five-day losing streak, Shanghai up too
    * Gains seen short-lived on unclear demand outlook
    * Coming Up: U.S. CPI, 1330 GMT

 (Updates prices, adds aluminium imports, Minmetals)	
    By Manolo Serapio Jr	
    SINGAPORE, Feb 17 (Reuters) - Copper rose more than 1
percent on Friday, ending a five-day losing streak, as hopes
that debt-laden Greece would secure a second bailout next week
revived appetite for risk assets.	
    But an unclear outlook for copper demand, particularly from
top consumer China, kept the industrial metal's gains in check,
with copper still headed for a second straight week of losses.	
    Three-month copper on the London Metal Exchange 
climbed 1.2 percent to $8,398.25 a tonne by 0727 GMT, after
touching a three-week trough on Thursday. The metal is off
around 1 percent so far this week.	
    The most-traded May copper contract on the Shanghai Futures
Exchange closed up 0.9 percent at 59,750 yuan a tonne.	
    Optimism is growing that Greece has finally done enough to
secure a second bailout after it set out extra budget savings,
boosting commodities and equities in Asia. 	
    Prices were also supported by more evidence of sustained
recovery momentum in the U.S. economy. U.S. data on Thursday
showed jobless claims falling to a near four-year low, solid
growth in factory activity in the Mid-Atlantic area and a
faster-than-expected rise in housing starts.    	
    But industrial metals may not sustain the upward momentum,
given the uncertainties surrounding China's economic growth and
commodity demand this year, said Vishnu Varathan, market
economist at Mizuho Corporate Bank.	
    "The case for a soft landing for China has already been
priced in, so incremental optimism seems to be stretched," he
said.	
    "In the near term, the whole fiscal austerity drive in the
euro zone means that it is almost a given that it is going to
remain in a recession. From a demand point of view, it doesn't
really make the commodity story that much more compelling."	
    LME copper has risen more than 10 percent this year,
although many analysts now think the metal may have outpaced
fundamentals, given slack Chinese demand even after the
week-long Lunar New Year break in late January.	
    Credit Suisse says industrial metals may pull back in the
near term "until clearer signs of renewed Chinese buying"
emerge, although it suggests that possibly tighter global supply
could support prices going forward.	
    "This year, mine production could continue to grow robustly
but we would note that some of the projects are prone to delays,
which could leave the market more tightly supplied than
anticipated," Credit Suisse said in a note.	
    For example, a recent surge in imports of primary aluminium
by China, the world's top producer and consumer of the metal,
could hit a wall in April as weak domestic prices drive traders
to cut new orders, trading sources said.   	
    China has raised its resource tax on iron ore, tin,
molybdenum, magnesium, talc, and boron in a bid to conserve
resources, an official newspaper said, a move that could curb
the output of local producers and make imports more attractive.
 	
    Also, Freeport McMoRan Copper & Gold Inc said it
wants to extend its contract with Indonesia's government to
enable it to run the world's second-biggest copper mine beyond
2021. 	
    China's Minmetals Resources sealed a C$1.3 billion
($1.3 billion) bid for Africa-focused copper miner Anvil Mining
, and said it was on the lookout for copper, zinc and
nickel acquisitions for up to $7 billion. 	
        	
  Base metals prices at 0727 GMT
  Metal              Last       Change   Pct Move YTD pct chg
  LME Cu            8398.25     98.25     +1.18     10.50
  SHFE CU FUT MAY2    59750       540     +0.91      7.93
  HG COPPER MAR2     381.95      2.85     +0.75     11.16
  LME Alum          2185.00     25.00     +1.16      8.17
  SHFE AL FUT MAY2    16175        50     +0.31      2.08
  LME Zinc          1998.00     20.00     +1.01      8.29
  SHFE ZN FUT MAY2    15575       -30     -0.19      5.27
  LME Nickel       20185.00    285.00     +1.43      7.88
  LME Lead          2040.00     25.00     +1.24      0.25
  SHFE PB FUT      15600.00      5.00     +0.03      2.06
  LME Tin          24295.00    290.00     +1.21     26.54
  LME/Shanghai arb^    2136
 
   Shanghai and COMEX contracts show most active months
   ^ LME 3-month copper in yuan, including 17 pct VAT, minus SHFE third month
 	
	
 (Editing by Miral Fahmy)
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