METALS-Copper up as data signals China growth acceleration

Thu Dec 27, 2012 12:08pm EST

* China industrial profit jumps 22.8 pct in Nov
    * U.S. fiscal cliff talks to remain in focus
    * Indonesia to raise purity requirements for tin exports

    By Silvia Antonioli and Harpreet Bhal
    LONDON, Dec 27 (Reuters) - Copper rose to a one-week high in thin trade on
Thursday, rebounding from falls in the previous session, as encouraging data
from China reinforced signs of a recovery in the economy of the world's top
metals consumer.
    Benchmark copper on the London Metal Exchange closed at $7,915 a
tonne, up more than 1 percent from its $7,801 official price in the final ring
trade of a holiday-shortened session on Monday.
    The metal was on track for its strongest daily increase this month. A
session high of $7,945.25 was its highest since Dec. 19.
    Data from Beijing showed that profits earned by China's industrial companies
jumped 22.8 percent in November from a year ago, accelerating from October's
20.5 percent. 
    China accounts for about 40 percent of the global copper consumption.
    "It's not only this one data point; we have seen a series of data releases
lately that were quite encouraging. Everything points to the fact that the
Chinese economy has probably hit the bottom and is now on the way to a very
moderate acceleration. At least it's getting better, and this is good for
cyclical markets like metals," said Credit Suisse analyst Tobias Merath.    
    "But I think this rebound has to be seen in the context of the drop that we
had just ahead of Christmas. That drop was not fully justified, and now market
conditions are pretty thin and with a few orders you can move the market."
    Traders cautioned as well that the thin holiday trade exaggerated price
movement, while the physical market remained sluggish.
    "Trading volumes in the physical market are quite slow as traders are tight
on cash near the year end," said a Shanghai-based trader. "I don't see any
significant change on the macroeconomic environment or policy."
    
    SLOW GROWTH
    Looking ahead, analysts said U.S. budget talks are likely to dictate the
direction of metals prices in coming weeks as investors wait to see whether the
White House and Republicans can reach a deal to avert massive tax hikes and
spending cuts as the deadline is only a few days away. 
    Failure to reach an agreement would risk tipping the U.S. economy back into
recession.    
    "The complex remains touchy to the U.S. fiscal cliff quickly approaching.
With no deal as of yet, the market is concerned the recent strength in the U.S
economy could reverse if the wave of higher taxes and lower spending becomes
reality," RBC said in a note. 
    "Unless a deal is done before the new year we expect volumes and activity to
remain subdued over the next three trading sessions."
    In industry news, workers at the world's biggest copper mine, Chile's
Escondida, rejected an early pay offer by mine controller BHP Billiton,
a union leader said on Wednesday. 
    In other metals, tin closed at $23,400, up from $23,200 at the
previous session's close. 
    Indonesia will increase its minimum purity requirements for tin ingot
exports next year, a trade ministry official said on Thursday, in its latest
move to bolster its domestic processing industries. 
    Aluminium ended at $2,080, down from $2,092 on Monday.
    Japan's Kobe Steel will cancel a plan to build an aluminium
products plant in China amid uncertainties over the sales outlook to its major
customers, such as Japanese automakers, the Nikkei business daily said on
Tuesday.
    Zinc, used to galvanize steel, ended at $2,102 from a last bid at
$2,090 on Monday, while battery material lead closed at $2,335 from
$2,319. Stainless steel material nickel ended at $17,275 from $17,005.
    
 Metal Prices at 1705 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       359.10        0.75     +0.21     344.75      4.16
  LME Alum      2080.50       -1.50     -0.07    2020.00      3.00
  LME Cu        7914.75       83.25     +1.06    7600.00      4.14
  LME Lead      2336.75       29.75     +1.29    2034.00     14.88
  LME Nickel   17275.00      -75.00     -0.43   18650.00     -7.37
  LME Tin      23401.00      176.00     +0.76   19200.00     21.88
  LME Zinc      2100.50       29.50     +1.42    1845.00     13.85
  SHFE Alu     15350.00       50.00     +0.33   15845.00     -3.12
  SHFE Cu*     57450.00      360.00     +0.63   55360.00      3.78
  SHFE Zin     15585.00       95.00     +0.61   14795.00      5.34
 ** Benchmark month for COMEX copper