METALS-Copper hits 5-week high on dollar, China growth prospects

Fri Nov 30, 2012 12:43pm EST

* Investors still betting China economy has bottomed
    * Euro hits 5-week high vs dollar
    * Aluminium Dec-Jan backwardation jumps to $20


    By Harpreet Bhal
    LONDON, Nov 30 (Reuters) - Copper rose to its highest level in more than
five weeks on Friday, supported by a weak dollar and growing confidence in the
economic outlook for top consumer China, with prices on track to post their
first monthly rise in two months.
    Three-month copper on the London Metal Exchange closed at $7,994 a
tonne. It was untraded at the close on Thursday, but was last bid at $7,899.50 a
tonne.
    Copper earlier hit a session peak of $7,995 a tonne, the highest since Oct.
23, helped by chart-based buying after it cracked its 200-day moving average of
$7,905. 
    Prices are on track to rise more than 2 percent in November, bringing total
gains this year to around 5 percent.
    "The market is now beginning to appreciate that the worst is over in terms
of the growth numbers in China and it does look like things there are beginning
to show a slow and gradual improvement," said Gayle Berry, analyst at Barclays.
    U.S. consumer spending and income data fell short of expectations earlier,
though business activity in the U.S. Midwest expanded for the first time since
August, data showed.  
    Looking ahead, investors are likely to focus on purchasing managers' index
(PMI) numbers from China due on Saturday for fresh indications of the pace of
recovery in the country, which accounts for 40 percent of global copper demand.
    Economists polled by Reuters expect China's factory activity in November
probably expanded at its fastest pace in seven months, reinforcing views that
the country's economic recovery is entrenched. 
    Copper prices could stage a snap rally going into the end of the year, given
low liquidity and supply constraints further out that make the metal one of the
top commodities picks for 2013, said Jonathan Barratt, chief executive of
Barratt's Bulletin, a Sydney-based commodity research firm. 
    "There's a couple of gazillion dollars on the sidelines waiting to park
itself. What I worry about is that all of a sudden there will be a rush to the
gates for big assets....I think now represents a good time to buy," he added. 
    The euro hit a 5-week peak against the U.S. dollar, helped by a deal agreed
earlier in the week to release aid funds to Greece. A weaker dollar makes
commodities priced in the U.S. dollar cheaper for holders of other currencies.
 
       
    
    CHINA DEMAND
    The world's biggest copper producer, Codelco said in an interview that it
saw encouraging signs of a recovery in China, adding that a pledge by China's
new leadership to boost urbanisation would boost demand for the red metal.
 
    China's top maker of copper tubes, Golden Dragon Precise Copper Tube Group,
expected 2013 production to rise by 14 percent from a year ago, as signs of an
improving economy inspire cautious optimism, boosting orders at home and abroad.
 
    Benchmark aluminium closed at $2,094 a tonne, up from a close of
$2,063 on Thursday, having earlier hit its highest in nearly eight weeks at
$2,094.25 a tonne. 
    It was boosted by a lack of available supply and chart-based buying after it
broke through its 200-day moving average of $2,024 on Thursday, traders said.
    Reflecting an absence of readily available stock, the premium for the
December contract jumped to $20 against the January contract on
Thursday from $3.75 at the start of the month. 
    Three-month zinc closed at $2,047 a tonne from Thursday's close of
$2,027, also hitting a near eight-week high at $2,062, while benchmark lead
 closed at $2,252 a tonne from $2,222.
    Tin closed at $21,845 a tonne from $21,870, and nickel at
$17,650 a tonne from $17,000. 
    
 Metal Prices at 1729 GMT
 Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T
  Metal            Last      Change  Pct Move   End 2011   Ytd Pct
                                                              move
  COMEX Cu       362.85        3.05     +0.85     344.75      5.25
  LME Alum      2087.25       24.25     +1.18    2020.00      3.33
  LME Cu        7985.25      205.25     +2.64    7600.00      5.07
  LME Lead      2243.50       21.50     +0.97    2034.00     10.30
  LME Nickel   17489.00      489.00     +2.88   18650.00     -6.23
  LME Tin      21851.00      -19.00     -0.09   19200.00     13.81
  LME Zinc      2047.25       20.25     +1.00    1845.00     10.96
  SHFE Alu     15495.00      120.00     +0.78   15845.00     -2.21
  SHFE Cu*     57270.00      900.00     +1.60   55360.00      3.45
  SHFE Zin     15455.00      290.00     +1.91   14795.00      4.46
 ** Benchmark month for COMEX copper
 * 3rd contract month for SHFE AL, CU and ZN
 SHFE ZN began trading on 26/3/07