* China factory sector activity expands in June
* China imports seen delayed after Qingdao probe
* U.S. manufacturing expands at fastest rate in 4 yrs
(Updates with closing prices)
By Maytaal Angel
LONDON, June 23 Copper futures on the London
Metal Exchange (LME) hit their highest level in nearly three
weeks on Monday on tight supply and signs of improved growth in
top copper consumer China.
The HSBC/Markit Flash China PMI showed China's factory
sector activity expanded for the first time in six months in
June, offering new signs the economy is stabilising thanks to
Beijing's measures to shore up growth.
In the United States, the manufacturing sector expanded more
strongly than expected in June, with the rate of growth and key
subindexes advancing to their highest levels in more than four
years, an industry report showed on Monday.
The global refined copper market showed a 205,000 tonnes
deficit in the first three months of the year, compared with a
206,000 tonnes surplus in the same period a year earlier, the
International Copper Study Group (ICSG) said.
Meanwhile, LME inventories fell 850 tonnes to 158,575
tonnes - the lowest level in nearly six years - while cash
copper held onto its premium over the three-month price
MCU0-3, also indicating supply tightness MCUSTX-TOTAL.
"Copper is being supported by robust demand from China,
tight stocks and a market deficit that wasn't expected by most
observers. Growth of 7.5 pct is not weak for the world's
second-largest economy," Commerzbank analyst Eugen Weinberg
Three-month LME copper closed at $6,885 a tonne
after hitting $6,900 a tonne, its highest since June 3. It
closed at $6,820 on Friday.
The most-traded August copper contract on the Shanghai
Futures Exchange rallied 2.3 percent to 49,550 yuan
($8,000) a tonne. It had earlier climbed to 49,610 yuan a tonne,
the strongest since Feb. 25.
China imported 282,969 tonnes of copper in May, up 21.89
percent versus a year ago, and bringing annual gains for the
year to date to nearly 50 percent, China customs data showed on
Limiting gains in copper was a continuing investigation into
suspected fraud at a Chinese port, which has caused banks to
take longer to approve loans for copper imports.
Shaken by a fraud investigation into metal financing in the
world's seventh-busiest port, banks and trading houses have been
made painfully aware of the risks they face storing commodities
in China's sprawling warehouse sector.
"Certainly China will reduce imports because of this
financing issue and it will also take a longer time to get
cleared," said Helen Lau, senior mining analyst at UOB-Kay Hian
Securities in Hong Kong.
But suggesting further gains in the near term, ShFE and LME
copper punched through their 200-day and 100-day moving averages
respectively, a key buy signal for chart-following strategies.
LME zinc, untraded at the close, was last bid at
$2,184 a tonne, after hitting a new 16-month peak of $2,198,
from $2,177 at the close on Friday.
The metal hit 16-month highs last week after data showed a
rising market deficit. Investors expect the deficit to grow as
more major mines shut down.
LME lead closed at $2,177 a tonne, having hit its
highest since late April at $2,175. It closed at $2,130 on
Aluminium closed at $1,890 a tonne from $1,886 on
Friday, tin at $22,525 a tonne from $22,575 and nickel
at $18,425 a tonne from $18,400.
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; editing by William
Hardy, Keiron Henderson and David Evans)