METALS-Copper lifted by China demand hopes, tight supply

Fri Feb 7, 2014 12:27pm EST

Related Topics

* Copper on track to post biggest weekly gain this year

* China markets reopen from week-long holiday

* U.S. non-farm payrolls disappoint in January (Adds closing prices)

By Harpreet Bhal and Maytaal Angel

LONDON, Feb 7 (Reuters) - Copper rose on Friday to post its largest weekly rise for the year, boosted by hopes of a pickup in demand after the Chinese New Year and by limited short-term availability of the metal in the physical market.

Metals were little affected by Friday's data showing that U.S. employers hired far fewer workers than expected in January, causing concerns that economic growth was losing momentum.

"The poor U.S. data is probably more positive than negative, because it takes the pressure off expectations of tapering", of the Federal Reserve's monetary stimulus programme, Wiktor Bielski, VTB Capital head of commodities research, said.

"I think over next two weeks we'll see an increase in Chinese buying. Overall stocks in China are not high; we have backwardations in Comex, LME and ShFE; premiums are high; so the market is not flush with copper," he added.

Three-month copper on the London Metal Exchange, ended up 0.15 percent at $7,141 a tonne. The metal used in power and construction gained 1.1 percent this week but is still down nearly 3 percent for the year.

Data showing dwindling supplies of copper stocks, which raised concerns about immediate availability, has lent support to prices. The figures showed stocks in LME-registered warehouses are at their lowest level in more than a year at 308,025 tonnes. MCUSTX-TOTAL

LME cash prices climbed on Thursday to $50.00 above the benchmark three-month contract, up from a premium of around $15 at the start of January. CMCU0-3

Markets in China, the world's largest copper consumer, reopened on Friday following the week-long Lunar New Year holiday. Recent soft factory data from the country has prompted caution about the outlook for economic growth and copper demand.

Earlier, data showed China's services sector grew at its slowest pace in almost 2-1/2 years in January after firms secured a smaller volume of new business, a private survey showed, adding to growing signs of slackening in the Chinese economy.

"Copper prices are likely to be choppy and range-bound ... it's still too early to buy on weakness," said Hong-Kong based analyst Helen Lau, at UOB Kay Hian Ltd.

In other metals traded, aluminium, lead and nickel all hit their highest level in a week, while zinc hit its highest level in two weeks.

Aluminium ended up 0.41 percent at $1,720 a tonne, lead <CMPB3 closed up 0.05 percent at $2,119 a tonne, nickel ended up 1.22 percent at $14,140 a tonne while zinc closed up 1.20 percent at $2,022 a tonne.

Tin ,CMSN3> ended up 0.32 percent at $22,180 a tonne.

PRICES

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 (Additional reporting by Melanie Burton in Sydney; editing by William Hardy, Jane Baird and David Evans)

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