By Silvia Antonioli
LONDON, Dec 4 Copper edged higher on Tuesday,
touching another six-week high on optimism that top copper
consumer China is on the road to recovery, but concern over U.S.
economic and fiscal issues kept gains in check.
Benchmark copper on the London Metal Exchange
touched an intraday peak of $8,068.50, the strongest since Oct.
19 and the fourth successive day of gains. Copper did not trade
at the close, but was bid at $8,030, up $25 from Monday's close.
The metal, mainly used in power and construction, also
touched a six-week high on Monday after data showed the pace of
activity in China's manufacturing sector quickened for the first
time in 13 months in November, adding to evidence its economy is
reviving. Copper has added 7 percent since Nov. 9.
China consumes about 40 percent of global copper supply.
U.S. data, however, weighed on the market, showing the U.S.
manufacturing sector had unexpectedly contracted in November,
falling to its lowest in over three years.
"The Chinese manufacturing data was well received but the
U.S. data was below expectations which is what took us down
later on yesterday and earlier today," said metals analyst Ivan
Szpakowski at Credit Suisse.
"But we think copper is going to continue to rally in the
next couple of months as from here on we should see some macro
improvement. We see China getting better and we think there is
good potential for restocking activity both in the U.S. and in
Lack of progress on the U.S. "fiscal cliff" talks about
potential spending cuts and tax hikes also kept a lid on prices
after the White House dismissed a proposal from congressional
Any kind of successful resolution to the fiscal issue would
unleash a significant inflow of money into risk assets including
commodity and base metals, according to analysts.
INTL FCStone analyst Edward Meir believes a deal among U.S.
lawmakers is highly likely.
"While there may be occasional setbacks, we still expect an
ultimate agreement, leading to a firmer tone in practically all
markets heading into year-end," Meir said in a note.
High inventories of copper in Asia and a looming increase in
global copper supply in 2013, however, are likely to cap gains.
Copper stocks in China's bonded warehouses hit a record high
of more than 1 million tonnes in November and are expected to
rise by a further 100,000 tonnes by the end of the year due to
weak domestic demand, traders said.
Most other LME metals suffered losses.
Aluminium closed 1.2 percent weaker at $2,094 a
tonne while battery material lead fell 1.1 percent to
2,231.50 and zinc lost 0.9 percent to $2,022.50.
Tin and nickel fared slightly better. Tin ended down
only 0.1 percent at $21,825 a tonne and nickel added $5
Metal Prices at 1733 GMT
Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T
Metal Last Change Pct Move End 2011 Ytd Pct
COMEX Cu 364.90 0.10 +0.03 344.75 5.84
LME Alum 2092.50 -27.50 -1.30 2020.00 3.59
LME Cu 8037.00 32.00 +0.40 7600.00 5.75
LME Lead 2232.50 -23.50 -1.04 2034.00 9.76
LME Nickel 17479.00 -21.00 -0.12 18650.00 -6.28
LME Tin 21733.00 -122.00 -0.56 19200.00 13.19
LME Zinc 2023.50 -16.50 -0.81 1845.00 9.67
SHFE Alu 15395.00 -65.00 -0.42 15845.00 -2.84
SHFE Cu* 57250.00 -270.00 -0.47 55360.00 3.41
SHFE Zin 15290.00 -145.00 -0.94 14795.00 3.35
** Benchmark month for COMEX copper
* 3rd contract month for SHFE AL, CU and ZN
SHFE ZN began trading on 26/3/07