METALS-Copper jumps to multi-month highs on Fed stimulus

Fri Sep 14, 2012 3:52am EDT

Related Topics

* LME copper hits 4-month high, ShFE copper hits 5-month
high
    * LME copper on track for weekly gain of more than 4 pct
    * LME tin, ShFE zinc up more than 4 pct
    * Fed to pump in $40 bln per month until jobs market lifts

 (Updates prices; adds quotes, details)
    By Carrie Ho
    SHANGHAI, Sept 14 (Reuters) - Copper prices rallied on
Friday, with benchmark London and Chinese contracts at their
highest in up to five months, after the U.S. Federal Reserve
launched a new round of aggressive stimulus that could boost
demand for industrial metals.
    Optimism in financial markets lifted Asian shares and drove
the euro to a four-month high against the dollar after the Fed
said it would pump $40 billion into the world's largest economy
each month until it saw a sustained upturn in the weak jobs
market. 
    "The announcement of the Fed to introduce a bold bond buying
program triggered further gains in commodity prices," said
Credit Suisse in a research note, adding that industrial metals
could extend their gains in the next few days, with investors
expected to focus on U.S. industrial output data later in the
session. 
    Three-month copper on the London Metal Exchange rose
3.7 percent to a session high of $8,371 a tonne, the highest
since May 2, before giving up some gains to trade at $8,335 by
0712 GMT.
   London copper is on track for a weekly increase of more than
4 percent, which would bring its gains over two weeks to over 9
percent, the biggest two-week rise since November last year.
    The January copper contract on the Shanghai Futures Exchange
 shot up over 4 percent to a session high of 60,480 yuan
($9,600) per tonne, its loftiest since April, but slipped to
60,370 yuan by its session close.
    Base metals rose across the board, with Shanghai zinc
 jumping 4.4 percent at one point to 15,980 yuan, its
highest since March. 
    LME tin rallied more than 4 percent, revisiting a
four-month peak of $21,200 it had touched on Wednesday.    
    While traders predicted a spike in base metal prices, they
doubted if the rally could be sustained for long, as downstream
copper demand in China remained sluggish with spot copper
trading at a 200-400 yuan discount to ShFE prompt September
futures. 
    "It's hard to say how long this rally will last, given the
uncertainties over how long the Fed will keep this stimulus
going and how effective it will be," said Orient Futures
derivatives director Andy Du.
    
    SCEPTICAL
    The slowdown in leading emerging market economies China,
India and Russia will persist over the coming quarters, while
the outlook for the euro zone remains weak, Paris-based economic
think-tank OECD said on Thursday. 
    The European Central Bank voiced similar concerns, saying
economic growth in the region was expected to remain weak and
that "heightened uncertainty" was weighing on confidence.
 
    In industry news, Russia's RUSAL, the world's
largest producer of primary aluminium, could offer floating
premiums in term supply contracts it negotiates with consumers
for 2013, with both sides reluctant to set long-term deals as
spot market premiums reach record highs. 
    The company chief executive, Oleg Deripaska, said he saw LME
aluminium prices rising to $2,300 per tonne in the first half of
2013. 
    In China, aluminium profile manufacturers in Guangdong have
reported a rise in orders this month, after a decline in order
books in the past 3-4 months. Analysts and industry sources
point see this as a sign of recovering demand.  
    
                                                               
  Base metals prices at 0712 GMT
  Metal              Last       Change   Pct Move YTD pct chg
  LME Cu            8335.00    260.00     +3.22      9.67
  SHFE CU FUT JAN3    60370      2250     +3.87      8.52
  LME Alum          2141.00     39.00     +1.86      5.99
  SHFE AL FUT DEC2    15890       180     +1.15      0.32
  HG COPPER DEC2     380.35      9.35     +2.52     10.70
  LME Zinc          2089.00     53.00     +2.60     13.22
  SHFE ZN FUT DEC2    15845       540     +3.53      7.10
  LME Nickel       17315.00    565.00     +3.37     -7.46
  LME Lead          2232.50     75.00     +3.48      9.71
  SHFE PB FUT         16200       400     +2.53      5.95
  LME Tin          21075.00    725.00     +3.56      9.77
  LME/Shanghai arb    1265
 
   Shanghai and COMEX contracts show most active months
   ^ LME 3-m copper in yuan, including 17 pct VAT, minus SHFE 
 third month
                                                               
 ($1 = 6.3296 Chinese yuan)

 (Editing by Clarence Fernandez and Miral Fahmy)
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