METALS-Copper rises after upbeat U.S. data, China demand eyed

Thu Jan 17, 2013 12:26pm EST

* Upbeat U.S. jobless claims, housing starts boost markets
    * Japan's Pan Pacific, miners agree on 10 pct rise in TC/RCs
for 2013
    * China Q4 GDP, December industrial output, retail sales due
Friday

    By Susan Thomas and Harpreet Bhal
    LONDON, Jan 17 (Reuters) - Copper rose more than 1 percent
on Thursday, after encouraging housing and labour market data
from the United States boosted optimism about the pace of
recovery in the world's largest economy and bolstered the
outlook for metals demand.
    Figures showed the number of Americans filing new claims for
unemployment benefits tumbled to a five-year low last week,
while separate data showed a surge in residential construction
last month, suggesting the housing market was now positioned to
support the economy's recovery this year. 
    This helped lift the metal used in power and construction to
session highs, with benchmark copper prices on the
London Metal Exchange rising to an intraday high of $8,065 a
tonne. It ended at $8,054 a tonne, up 1.3 percent from
Wednesday's close of $7,946.
    "The way things are going at the minute, the U.S. housing
market looks to be one of the best parts of the U.S. economy,"
said Nic Brown, head of commodities research at Natixis. 
    "It looks to us like a large inventory cycle is finally
turning in favour of a tighter U.S. housing market which
therefore requires more new houses to be built. It's a cycle
which will boost activity and boost credit creation." 
    U.S. stocks hit a five-year high at the open after the data,
while the dollar was weak against the euro  
    A weak dollar makes commodities priced in the U.S. unit
cheaper for holders of other currencies. 
    Copper prices hit their highest level in more than two
months earlier in January following a deal by U.S lawmakers to
avoid a "fiscal cliff" of spending cuts and tax increases. 
    But prices have since retreated on fears the U.S. Federal
Reserve may rein in easing measures sooner than expected and
caution ahead of upcoming U.S. debt ceiling negotiations. 
     
 
    CHINA DEMAND 
    Keeping gains in check was uncertainty about the outlook for
demand from top metal consumer China, where traders and analysts
expect buying to remain subdued until after the week-long Lunar
New Year holiday in mid February.
    While a Reuters poll showed China's annual economic growth
is forecast to have quickened to 7.8 percent in the fourth
quarter, the recovery is likely to be tepid and the economy may
need continued policy support.  
    "As the year progresses I think what you'll start to see is
that the upturn in Chinese economic growth will not feed through
into sustained strength in commodities demand," Ross Strachan,
an economist at Capital Economics, said.
    "The double digit growth rates we have seen (in China) in
the past is not likely to return."
    Decreased appetite for copper in China is evident in
official statistics, which showed that December imports fell
after a year spent accumulating stockpiles of the metal.
    Analysts estimate copper stocks in bonded warehouses in
China are at around 800,000-900,000 tonnes, or three times the
amount currently held in London Metal Exchange (LME) warehouses.
    At the same time mine production is improving, with Credit
Suisse seeing growth of 5-6 percent this year.
    This is also being reflected in rising fees for smelters,
which have gained the upper hand in negotiations over processing
fees with miners this year.
    Japan's biggest copper smelter, Pan Pacific Copper,
and China's top smelter, Jiangxi Copper, have won
rises of more than 10 percent in copper concentrate treatment
and refining charges from major miners, company sources said,
reflecting a recovery in copper mine supply after years of
deficit. 
    Global miners pay TC/RC to smelters to convert concentrate
into refined metal, with the charges deducted from the sale
price, based on LME copper prices. Higher charges are typically
seen when concentrate supply rises or smelter capacity thins.
    In other metals benchmark aluminium ended at
$2,048.50 a tonne from Wednesday's close of $2,045. Tin 
climbed to a fresh 11-month intraday high at $25,525, before
ending at $24,920 from $24,995. 
    Lead closed at $2,285 from $2,266 on Wednesday and
nickel ended at $17,600 from $17,400. Zinc 
closed at $2,010 from a last bid of $1,979 on Wednesday.
    
 Metal Prices at 1703 GMT
 Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T
  Metal            Last      Change  Pct Move   End 2012   Ytd Pct
                                                              move
  COMEX Cu       364.90        5.10     +1.42     365.25     -0.10
  LME Alum      2047.25        2.25     +0.11    2073.00     -1.24
  LME Cu        8045.00       99.00     +1.25    7931.00      1.44
  LME Lead      2284.50       18.50     +0.82    2330.00     -1.95
  LME Nickel   17532.00      132.00     +0.76   17060.00      2.77
  LME Tin      24950.00      -45.00     -0.18   23400.00      6.62
  LME Zinc      2008.00       14.00     +0.70    2080.00     -3.46
  SHFE Alu     15240.00      -15.00     -0.10   15435.00     -1.26
  SHFE Cu*     57740.00     -200.00     -0.35   57690.00      0.09
  SHFE Zin     15265.00        0.00     +0.00   15625.00     -2.30