METALS-Copper rises on softer dollar, supply limits gains

Wed Dec 4, 2013 12:11pm EST

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* HKEx plans to launch monthly, cash-settled metals contracts -CEO

* U.S. private sector adds 215,000 jobs in Nov

By Susan Thomas and Harpreet Bhal

LONDON, Dec 4 (Reuters) - Copper rose on Wednesday as the dollar fell but the price remained under pressure due to slow demand and rising supplies of the industrial metal.

Concerns that the U.S. Federal Reserve may withdraw its commodities-friendly stimulus after robust economic data added to investor caution.

Three-month copper on the London Metal Exchange ended at $7,095, up from $6,960 at the close on Tuesday.

"We see a gradual long-term story, where oversupply and overcapacity in the copper market will gradually drag down prices over the next couple of years and coupled with that a weak demand outlook," Capital Economics analyst Tom Pugh said.

A softer dollar versus a basket of currencies on Wednesday helped prop up the copper price. A weaker U.S. currency makes it less expensive for foreign investors to purchase dollar-priced commodities, typically lifting prices.

Also boosting investor sentiment was data showing U.S. private employers added 215,000 jobs in November, topping economists' expectations, a move which could bring the U.S. Fed closer to curtailing its massive monetary stimulus.

"The ADP employment data has pushed copper up which was already recovering its losses from yesterday," said Naeem Aslam, chief market analyst at Ava Trade.

"The final figure for the API employment data has blown past the expectation, and this was enough for the market pundits to light up tapering talk further."

The stimulus programme has released more money into the economy, and has been used to buy assets including commodities.

World production of refined copper grew by 6 percent or 788,000 tonnes in the first eight months of the year, compared with year-ago figures, the International Copper Study Group (ICSG) said last month. This stemmed mainly from a 15.5 percent rise in China's output.

In Chile, the world's largest producer of copper, production improved more rapidly than expected this year, with the country's mined output up by almost 7 percent in the year to September, according to World Bureau of Mining Statistics data.

In China, the world's top consumer of most commodities, leaders pledged at a meeting of the decision-making Politburo on Tuesday to quicken economic reforms in 2014, while keeping policy stable and consistent, the official Xinhua news agency reported.

But signs are emerging that the pick-up in activity might not result in a quicker pace of consumption of commodities such as copper.

"The type of economic growth in China is going to move from commodity intensive investment to more consumer driven services-type spending," Pugh said. "So even though China's economy might in absolute terms still be growing, it will be using a lot less copper per unit of economic growth."

In exchange news, Hong Kong Exchanges and Clearing Ltd (HKEx) plans to launch monthly, cash-settled futures contracts based on its suite of London Metal Exchange (LME) contracts, CEO Charles Li told Reuters.

LME benchmark three-month zinc ended at $1,895 per from $1,875 at the close on Wednesday. Aluminium was at $1,772 from $1,740, lead ended at $2,085 per tonne from $2,064, tin closed at $22,725 per tonne from $22,450 and nickel was $13,650 per tonne from $13,450.


Three month LME copper

Most active ShFE copper

Three month LME aluminium

Most active ShFE aluminium

Three month LME zinc

Most active ShFE zinc

Three month LME lead

Most active ShFE lead

Three month LME nickel

Three month LME tin

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