METALS-Copper gains on weak dollar, tin hits 8-week high

Fri Feb 14, 2014 12:08pm EST

Related Topics

* Dollar falls vs euro after euro zone economy accelerates

* Shanghai warehouse copper stocks up 20.4 pct

* Tin jumps to 8-week high on Indonesian worries (Updates with closing prices)

By Harpreet Bhal and Eric Onstad

LONDON, Feb 14 (Reuters) - Copper rose on Friday, helped by a weak dollar and limited short-term availability of the metal in the physical market, but gains were limited by uncertainty about the demand outlook following soft U.S. and Chinese economic data.

Other metals also gained. Tin, the best performer, jumped to a eight-week high on worries about supply from Indonesia.

Three-month copper on the London Metal Exchange closed up 0.6 percent to $7,150 a tonne, rebounding after a decline on Thursday. The metal used in power and construction was down about 3 percent for the year to date.

Helping gains was a rise in the euro against the dollar following better-than-expected German and French economic growth data. A weak dollar makes commodities priced in the U.S. unit cheaper for holders of other currencies.

Data showing dwindling supplies of copper stocks, which raised concerns about immediate availability, also lent support. Data showed stocks in LME-registered warehouses were at their lowest in more than a year at 299,125 tonnes. MCUSTX-TOTAL

Copper prices posted their biggest weekly gain of the year last week on signs global economic growth was gaining steam, but doubts over China's trade data and a bitter winter curbing U.S. growth have cut short copper's momentum.

"Yes, it is true that some shorts are getting squeezed out as more bullish bets are building up, given the supply data monitored by the LME, but the bottom line is (economic) growth, which is going to impact the price for the metal," said Naeem Aslam, chief market analyst at Ava Trade.

He said that in the longer-term copper prices could rise but the market would need to see more evidence of positive data from top consumer China.

The latest data showed growth in China's auto market slowed to 6 percent in January, a third of the rate seen in December, partly weighed down by sluggish sales of trucks and other commercial vehicles.

China's local market was amply supplied. Copper stocks in its bonded zone jumped to more than 600,000 tonnes by mid-February as huge January imports have seeped back into local markets, analyst Chunlan Li at CRU in Beijing said.

Stocks in China's ShFE warehouses have swelled by 30,000 tonnes to around 150,000 tonnes this year, reversing a downtrend in place since March. The latest data showed these inventories rose 20.4 percent from last Friday, the ShFE said.

Li said workers at copper product makers were only slowing checking in after the Lunar New Year break and that activity was still well below the seasonal peak period that comes in March.

WORRIES ABOUT TIN

Tin was the biggest winner on the LME, climbing to a high of $23,082 a tonne, the strongest since Dec. 20, before paring gains to close at $22,975, up 1.8 percent.

Investors are worried Indonesia may clamp down on tin solder exports after a surge of shipments, said analyst Leon Westgate at Standard Bank in London.

"Any action to clamp down on solder exports would temporarily reduce tin availability, with production already impacted by weather patterns anyway," he said in a note.

Exports of tin solder increased after the government last year introduced regulations forcing tin ingot exporters to trade on a domestic exchange before shipping, part of a plan to set its own price benchmarks.

Refined tin exports slid 66 percent in December, data showed this week.

In other metals, aluminium added 0.2 percent to close at $1,745.50 a tonne, lead ended 0.9 percent higher at $2,138 and nickel climbed 0.9 percent to finish at $14,250.

Zinc failed to trade in closing rings and was last bid at $2,040, up 0.8 percent.

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 David Evans and Jane Baird)

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