METALS-Copper near 2-month high on China data, risks remain

Mon Dec 10, 2012 12:58pm EST

* China November factory output highest in 8 months
    * S. Korea to lift metals purchases by 20 percent in 2013
    * Tin hits 8-month high; zinc, lead, aluminium, nickel at 2-month high

    By Maytaal Angel and Silvia Antonioli
    LONDON, Dec 10 (Reuters) - Copper hit its highest price in almost two months
on Monday as investors took heart from rising factory output growth in top
consumer China, although data also showed Chinese exports and imports were below
forecasts, tempering the metal's gains.
    Also restraining the rise in copper was news of Italian Prime Minister Mario
Monti's surprise decision to resign early, raising political risk in a country
that remains a focus of the euro zone debt crisis. 
    Three-month copper on the London Metal Exchange closed up 1.3
percent at $8,140 a tonne, extending a small gain from the previous session,
when it logged a fourth week of gains. 
    Prices earlier hit $8,159 a tonne, the highest since Oct. 19.
    China's copper imports rose 13.5 percent in November from the previous month
but the figure was boosted by the arrival of delayed shipments after a week-long
holiday, meaning overall demand remained weak. 
    "The Chinese macro data was relatively good with a slight uptick in terms of
industrial production, investment etc. and although the copper numbers were not
particularly good themselves I think the sentiment is starting to turn a little
bit," Standard Chartered analyst Daniel Smith said.
    "Our clients are turning somewhat more bullish from what we see, covering
short positions. In the short term we are probably going to go higher but I
don't see that much upside given the wider backdrop," he added, underlining that
copper stocks were still very high in China.
    China data at the weekend showed both industrial output and retail sales
rose in November at their fastest annual pace in eight months, while on Monday
figures showed China's exports growth slowed sharply to a much lower than
expected 2.9 percent in November. 
    The weak export numbers illustrate the drag on the revival in the Chinese
economy as its major buyers struggle - Europe and Japan with recession and the
United States with a sluggish recovery.
    Recent U.S. data, however, has shown improvement in housing and jobs, though
apprehension is setting in again ahead of the year-end U.S. "fiscal cliff"
deadline, when automatic government spending cuts and tax rises will be enacted
unless Republicans and Democrats reach a deal.    
    Supporting the industrial metals outlook, South Korea, the world's fourth
biggest base metals buyer, will raise purchases by its state-run procurement
agency (PPS) by 20 percent in 2013, an agency official said on Monday. 
    The PPS also said it would list a 1,100-tonne copper commodity exchange
traded fund (ETF) worth $10 million on South Korea's stock exchange on Dec. 17.
 
    
    MARKETS NEWS
    Looking ahead, copper should get some support from a U.S. Federal Reserve
meeting on Tuesday and Wednesday, at which many economists expect the central
bank will announce monthly bond purchases of $45 billion.
    The move would signal the Fed's willingness to continue pumping money into
the U.S. economy during 2013 in a bid to bring down unemployment.
 
    Back in China meanwhile, Barclays Capital said it expects copper demand to
remain soft and that the country will export more metal next year, perhaps
averaging 10,000 to 15,000 tonnes per month.
    "This week has seen further incremental Chinese data improve, but concerns
remain over the potential for a copper surplus in 2013 and the ability of miners
to balance growth and shareholder return in the current environment," Macquarie
analysts said in a note.
    In other metals traded, soldering metal tin, untraded in rings, was
last bid at $23,090 a tonne, up more than five percent from a close of $21,775
on Friday. Earlier it hit its highest in almost eight months at $23,120.
    Zinc, used in galvanizing, closed almost 3 percent up at $2,085 a
tonne, having hit a two-month high earlier of $2,092.25 a tonne.
    Battery material lead closed up almost 4 percent at $2,298 having
earlier hit a two-month high of $2,303 a tonne earlier.
    Aluminium, untraded in rings, was last bid at $2,131. It hit a
session high of $2,138, its highest in more than two months.
    Stainless-steel ingredient nickel closed up more than 3 percent at
$17,775 a tonne, having hit a 2-month high of $17,867.
    
 Metal Prices at 1720 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       369.85        4.50     +1.23     344.75      7.28
  LME Alum      2129.00       40.00     +1.91    2020.00      5.40
  LME Cu        8134.25       99.25     +1.24    7600.00      7.03
  LME Lead      2297.25       82.25     +3.71    2034.00     12.94
  LME Nickel   17758.00      533.00     +3.09   18650.00     -4.78
  LME Tin      22900.00     1125.00     +5.17   19200.00     19.27
  LME Zinc      2085.50       57.50     +2.84    1845.00     13.04
  SHFE Alu     15345.00       20.00     +0.13   15845.00     -3.16
  SHFE Cu*     57920.00      550.00     +0.96   55360.00      4.62
  SHFE Zin     15475.00      125.00     +0.81   14795.00      4.60
 ** Benchmark month for COMEX copper
 * 3rd contract month for SHFE AL, CU and ZN
 SHFE ZN began trading on 26/3/07