METALS-Copper hits 1-week top, shorts cover on policy-easing hopes

Thu Apr 25, 2013 3:32am EDT

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* Norilsk mulls shutdown of some nickel operations
    * Below $7,100 copper remains in downtrend- trader
    * Coming Up: U.S. weekly jobless claims; 1230 GMT


    By Melanie Burton
    SINGAPORE, April 25 (Reuters) - London copper climbed above
the $7,100 mark to a one-week high on Thursday as a stream of
poor economic indicators in Europe raised hopes for easier
monetary policy and prompted short-covering.
    German business sentiment in April was worse than the most
pessimistic of forecasts, hurting confidence already undermined
by this week's series of weak manufacturing sector reports. This
has fuelled hopes the European Central Bank could cut rates as
soon as next week.   
    Three-month copper on the London Metal Exchange rose
to $7,101 a tonne, its highest since April 18, before paring
gains to $7,073 a tonne by 0701 GMT, still up 0.63 percent and
adding to the prior session's 2.3 percent advance.
    London copper has consolidated since hitting a year-and-a
half-low of $6,762.25 a tonne on Tuesday but is still down more
than 10 percent for the year. 
    The most-traded August copper contract on the Shanghai
Futures Exchange rose 2.7 percent to close at 51,280
yuan ($8,300) a tonne.    
    "Recent concerns have emanated from weak manufacturing data
in China, the euro zone and the U.S., but none of these
economies have plunged off a cliff," said Thomas Lam, chief
economist at DMG & Partners Securities in Hong Kong.
    "Probably we will see some stabilisation in the near term,
based on expectations that central banks will, if not extend
easing, then delay any normalisation of policy," he added. 
    Asian shares edged higher on Thursday, supported by views
that the recent run of weak global economic data will encourage
major central banks to keep or deepen their monetary stimulus to
bolster growth.  
    In the latest signs of a slowdown in economic activity,
orders for long-lasting U.S. manufactured goods recorded their
biggest drop in seven months in March and a gauge of planned
business spending rose only modestly. 
    "Copper is over-reaching each time on the short-covering
rallies of last few sessions. The market could spike, but I am
not sure the wider story has changed," a Hong Kong-based trader
said.
    "Below $7,100 we are still going to stay in the lower range,
although trade will be choppy. Above that level I think people
might start to see how deep their pockets are," he added.
    Open interest in the most active ShFE copper contract
reached a record high near 420,000 lots on Tuesday, when prices
hit the lowest in almost three years. 
    But as prices bounced on Wednesday, open interest tumbled 14
percent, reflecting a shutdown of short positions which traders
said has continued today.
    Book-squaring in China, ahead of next week when markets will
be closed for three days due to Labour Day holidays, fuelled
short-covering in Shanghai. 
    NICKEL
    Nickel prices dropped to near four-year lows this week as
LME inventories have swollen to record highs, prompting some
producers to consider shuttering operations. 
    Nickel prices fell to $15,075 a tonne on Wednesday, the
lowest since July 2009 while LME stocks are now at record peaks
above 175,000 tonnes. 
    Russia's Norilsk Nickel, the world's largest
nickel and palladium producer, may suspend operations at its
Tati Nickel mine in Botswana after a sharp drop in metal prices,
a company document showed on Wednesday.    
   PRICES    
  Base metals prices at 0701 GMT                                                 
  Metal              Last       Change   Pct Move YTD pct chg
  LME Cu            7073.75     44.25     +0.63    -10.79
  SHFE CU FUT AUG3    51280      1330     +2.66    -11.10
  HG COPPER MAY3     319.60      3.90     +1.24    -12.50
  LME Alum          1919.00      8.00     +0.42     -7.34
  SHFE AL FUT AUG3    14670        60     +0.41     -4.40
  LME Zinc          1914.25     -4.75     -0.25     -7.23
  SHFE ZN FUT AUG3    14735      -810     -5.21     -5.21
  LME Nickel       15320.00     50.00     +0.33    -10.70
  LME Lead          2045.50      0.50     +0.02    -12.59
  SHFE PB FUT      13970.00     70.00     +0.50     -8.39
  LME Tin          21000.00    100.00     +0.48    -10.26
  LME/Shanghai arb^
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