METALS-Copper rises from 7-week low on US growth optimism

Fri Oct 26, 2012 9:51am EDT

* Base metals rise from 1-1/2 month lows
    * Copper arb window opened but China demand slow - traders
    * U.S. Q3 GDP picks up thanks to consumer spending burst

    By Harpreet Bhal and Silvia Antonioli
    LONDON, Oct 26 (Reuters) - Copper rose from a 7-week low on Friday, after
data showed U.S. economic growth picked up in the third quarter, quashing
pessimism on the state of the global economy and boosting demand prospects for
industrial metals. 
    Benchmark copper on the London Metal Exchange (LME) was at $7,835
by GMT, up 0.3 percent from Thursday's close of $7,815 a tonne and up from a
7-week low of $7,756.25 earlier in the session.
    Aluminium, lead, zinc and nickel also rose from a 1-1/2 month low hit
previously while tin hovered around its lowest level since early September.
    U.S. economic growth picked up in the third quarter as a late burst in
consumer spending offset the first cutbacks in investment in more than a year
by cautious businesses.   
    "It was a positive surprise so all the commodities turned higher,
especially the industrial commodities," said Commerzbank analyst Eugen
Weinberg.
    "One of the reasons for the copper slide before was the economic pessimism.
So if the situation is not quite as bad as many expected, then that's a
definitely positive for metals." 
    Copper, however, was still down 2 percent for the week and on course for
its biggest weekly fall since late June.
    Prices for the metal rallied nearly 8 percent in September, fuelled by the
third round of quantitative easing (QE) by the U.S. Federal Reserve, the
promise of bond buying by the European Central Bank (ECB) and stimulus measures
in Japan and China.
    Copper then weakened in October as expectations that real demand for metals
would improve failed to materialise.
    Capping gains, the euro fell against the dollar, with traders citing
concerns that Greece may miss its austerity targets and political uncertainty
in Athens. 
    A strong dollar makes commodities priced in the U.S. unit more expensive
for holders of other currencies. 

    
     
    CHINA DEMAND 
    In top copper consumer China, factory output recovery remains clouded by
uncertainty in export markets, although it should grow faster in the last three
months of 2012 than in the third quarter, the Ministry of Industry and
Information Technology said on Thursday. 
    "Downstream copper buyers in China are taking a wait-and-see attitude to
restocking, as they are undecided about copper's outlook over the next few
months," said a Shanghai-based physical trader. 
    Chinese buying interest has been weak, although three-month LME copper
prices had dipped below the most active Shanghai copper contract for the most
part of the week, the trader added. 
    In other metals, aluminium was at $1,939 from a close of $1,938 on
Thursday.
    Analysts warned producers of the packaging material may face higher
seaborne alumina costs should China's bauxite imports from one of its top
suppliers, Indonesia, continue to drop. Bauxite is used to make alumina, the
precursor of aluminium. 
    "The decline in Indonesian bauxite exports in September may suggest bauxite
operators are not obtaining export licences because they are turning away from
investing in alumina refineries in Indonesia," Australia's Commonwealth Bank
warned in a research note on Friday. 
    Lead was at $2,018 from a $2,005 close on Thursday and zinc 
at $1,843.75 from $1,836. 
    Nickel changed hands at $16,232 versus Thursday's close of $16,125
while tin traded at $20,050 from Thursday's close of $20,400, having
earlier hit its lowest level since early September at $19,850. 
    
 Metal Prices at 1330 GMT
                                                                               
  Metal            Last      Change  Pct Move   End 2009   Ytd Pct
                                                              move
 VALUE
  LME Alum      1925.00      -13.00     -0.67    2230.00    -13.68
  LME Cu        7765.00      -50.00     -0.64    7375.00      5.29
  LME Lead      1995.00      -10.00     -0.50    2432.00    -17.97
  LME Nickel   16095.00      -30.00     -0.19   18525.00    -13.12
  LME Tin      19945.00     -455.00     -2.23   16950.00     17.67
  LME Zinc      1832.00       -4.00     -0.22    2560.00    -28.44
  SHFE Alu     15310.00      -65.00     -0.42   17160.00    -10.78
  SHFE Cu*     56710.00     -520.00     -0.91   59900.00     -5.33
  SHFE Zin     14645.00     -215.00     -1.45   21195.00    -30.90
 ** 1st contract month for COMEX copper
 * 3rd contract month for SHFE AL, CU and ZN
 SHFE ZN began trading on 26/3/07