METALS-Copper snaps losses, China caps gains

Mon Feb 25, 2013 12:14pm EST

* China Feb HSBC flash PMI eases from two-year high
    * China Jan copper imports fall 27.51 percent from last yr
    * Investors watching Italian elections, Fed policy

    By Maytaal Angel and Harpreet Bhal
    LONDON, Feb 25 (Reuters) - Copper rose on Monday to rebound from a six-day
losing streak, although gains were kept in check by slower growth of
manufacturing activity in top consumer China, where post-holiday buying has yet
to pick-up aggressively. 
    Three-month copper on the London Metal Exchange ended at $7,835 a
tonne, up from a close of $7,805 on Friday when it posted a weekly loss of
nearly 5 percent, its sharpest since mid-December, 2011.
    Copper remained in positive territory as traders saw fair value in the price
following last week's sharp correction. 
    But weighing on sentiment was data showing China's HSBC flash purchasing
managers' index (PMI) for February slipped to a four-month low of 50.4 from
January's final reading of 52.3. The flash PMI still indicated a fourth
consecutive month of expansion.
    In addition, trade data showed imports of the metal into China, which
consumes about 40 percent of the world's copper, reached just 243,174 tonnes in
January, down 27.51 percent from a year ago.     
    "The pullback we've seen is a realignment of prices to where fundamentals
are but we are moving into a period where demand should start to pick up. A lot
of factories in China are still closed. Some will start opening this week," said
Barclays Capital analyst Gayle Berry.
    She added, however, that the market balance this year was a small surplus so
any upside that could come over the next month from stronger demand would be
capped by that better supply.
    Having pushed copper to a four-month high earlier this year, investors are
now growing nervous again over euro zone debt, partly in light of an election in
Italy, and about U.S. monetary policy and budget woes.
    Testimony on Tuesday from U.S. Fed Chairman Ben Bernanke may offer investors
clues about when the Fed intends to rein in its ultra-loose monetary policy, but
they still have to contend with the looming fiscal cliff.
    In a replay of tensions seen at the end of last year, the world's biggest
economy faces automatic spending cuts in most government programmes on March 1
if Washington can't come up with a budget deal.
    
    HOPES ON CHINA
    Traders expect physical purchases to pick up from this week as China's
manufacturing sector returns to work after the Lunar New Year break. However,
the seasonal upturn in demand may not necessarily push prices much higher.
    "There was quite a bit of misplaced expectations last week surrounding the
return of the Chinese from their Lunar New Year Holidays, as hopes for a
"welcome back" buying spree turned out to be as illusory as a pollution-free day
in Beijing," said Ed Meir, analyst at INTL FCStone.
    Supporting sentiment, BlackRock Inc. has won approval from the U.S.
securities regulator to list and trade its copper exchange-traded fund. This
suggests extra demand for physical copper.
    Aluminium ended at $2,037 a tonne, from a last bid of $2,048 on
Friday. It earlier dropped to its lowest since mid-January at $2,029.25 a tonne
under pressure from increasing output in China and continued technical selling.
    Soldering metal tin closed at $23,135 from $23,105 and zinc,
used in galvanizing, ended at $2,089 from $2,088.
    Battery material lead closed at $2,293 from $2,304 while
stainless-steel ingredient nickel ended at $16,705 from $16,940. 
    
 Metal Prices at 1704 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       354.25        0.95     +0.27     365.25     -3.01
  LME Alum      2036.00      -67.00     -3.19    2073.00     -1.78
  LME Cu        7843.75       38.75     +0.50    7931.00     -1.10
  LME Lead      2292.25      -11.75     -0.51    2330.00     -1.62
  LME Nickel   16702.00     -238.00     -1.40   17060.00     -2.10
  LME Tin      23150.00       45.00     +0.19   23400.00     -1.07
  LME Zinc      2090.25        2.25     +0.11    2080.00      0.49
  SHFE Alu     14840.00     -110.00     -0.74   15435.00     -3.85
  SHFE Cu*     57280.00     -340.00     -0.59   57690.00     -0.71
  SHFE Zin     15550.00     -145.00     -0.92   15625.00     -0.48