Copper edges up as U.S. data sustains global growth hopes

Thu Mar 14, 2013 11:51pm EDT

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* Shanghai bonded copper premium up $65-$70 -trader
    * Copper to end year around $3.20-$3.30/lb ($7,055-$7,275 T)
-AME Group
    * Coming Up: U.S. industrial output ; 1315 GMT

 (Adds analyst, trader quote, updates prices)
    By Melanie Burton
    SINGAPORE, March 15 (Reuters) - London copper firmed on
Friday and was set to close higher for a second straight week
after U.S. jobs and inflation figures showed further signs of
economic recovery, but prices were capped as high stockpiles in
China discouraged buyers. 
    Three-month copper on the London Metal Exchange rose
by 0.26 percent to $7,820 a tonne by 0247 GMT. 
    Copper is set to close the week up around one percent, but
still remains in negative territory for the year, having dropped
more than 6 percent from early February's 2013 peaks.
    The most-traded July copper contract on the Shanghai Futures
Exchange rose 0.65 percent to 56,910 yuan ($9,200)a
tonne.
    "We see copper fully priced where it is at the moment," said
analyst Matt Fusarelli at consultancy AME Group in Sydney.
    "We are expecting a surplus this year of copper and we are
now up several hundred thousand tonnes since the start of the
year, indicative of where the market is moving," he added.
    ShFE and LME copper stocks have climbed more than 200,000
tonnes, or more than a quarter of combined total stocks so far
this year.MCU-STOCKS CU-STX-SGH 
    AME expects prices to ease over the second quarter and close
the year around $3.20 a pound ($7,055-$7,275 a tonne). 
    The number of Americans filing new claims for unemployment
benefits dropped for a third straight week last week, the latest
indication the labor market recovery was gaining traction.
    A second report from the Labor Department offered little
reason to worry about a rise in inflation, with food prices at
the wholesale level almost reversing January's increase and the
cost of automobiles rising only marginally.
    Other data on Thursday showed a spike in the cost of
gasoline pushed up producer prices last month, but a lack of
broad price pressures gives the Federal Reserve scope to
maintain its very easy monetary policy. 
    "Ahead of today's consumer price index release from the
United States, the market will be watching closely whether
quantitative easing (QE) has impacted on inflation," Mizuho
Corporate Bank said in a research note.
    "The Fed has a target inflation of around 2.0 percent.
Should CPI numbers post a big gain then it will be another round
of USD buying, which would provide further consolidation to the
belief that QE will be ending," the bank said.
    Any increase in the dollar could weigh on metals prices as a
firmer dollar typically erodes metals demand because buyers with
other currencies have to pay more for their metal.
        
    MARKETS NEWS    
    China buying has been supporting prices, helped by a
narrowing price between Shanghai and the landed cost of LME
copper, which attracts a 17 percent value-added tax for imports.
    Chinese investors import metal to sell into the domestic
market and obtain funds to invest in other higher yielding
assets such as real estate. This play helped to swell Shanghai's
bonded stocks to record highs this year. 
    Importers would still have to pay a price differential of 67
yuan ($10.78) on Friday, much less than 600 yuan in December,
helping firm premiums of domestic copper. 
    "Bonded premiums are up around $20 from this time last year
at $65-$70," said a trader at a Chinese merchant. "We haven't
seen any consumer demand, just buying for long term contracts."
   PRICES    
  Base metals prices at 0247 GMT                                                                                          
  Metal              Last       Change   Pct Move YTD pct chg                                                             
  LME Cu            7820.00     20.00     +0.26     -1.37                                                                 
  SHFE CU FUT JUL3    56910       370     +0.65     -1.33                                                                 
  HG COPPER MAY3     354.40      0.75     +0.21     -2.97                                                                 
  LME Alum          1978.00     -1.00     -0.05     -4.49                                                                 
  SHFE AL FUT JUN3    14810       -35     -0.24     -3.49                                                                 
  LME Zinc          1983.00      7.00     +0.35     -3.90                                                                 
  SHFE ZN FUT JUN3    15280      -265     -1.70     -1.70                                                                 
  LME Nickel       17185.00    -40.00     -0.23      0.17                                                                 
  LME Lead          2243.00     -5.50     -0.24     -4.15                                                                 
  SHFE PB FUT      14745.00     45.00     +0.31     -3.31                                                                 
  LME Tin          23925.00      0.00     +0.00      2.24                                                                 
  LME/Shanghai arb^     -67                                                                                               
                                                                                                                          
   Shanghai and COMEX contracts show most active months                                                            
   ^ LME 3-month copper in yuan, including 17 pct VAT, minus SHFE third month
                                                                                                                          
 ($1=6.2155 Chinese yuan)

 (Reporting by Melanie Burton; Editing by Clarence Fernandez)
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