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METALS-Copper hits highest since Feb, zinc races to 3-year peak
July 8, 2014 / 9:22 AM / 3 years ago

METALS-Copper hits highest since Feb, zinc races to 3-year peak

* Speculators buying back short positions in copper, zinc

* Zinc’s technical outlook turning bullish - Triland

* Coming up: U.S. consumer credit data for May at 1900 GMT (Updates with closing prices)

By Harpreet Bhal and Eric Onstad

LONDON, July 8 (Reuters) - Copper, aluminium and zinc touched fresh peaks on Tuesday, driven by speculators buying back short positions as the outlook for the global economy brightened.

Zinc rose to its loftiest in three years, also boosted by uncertainty over future shortages, while aluminium hit a one-year high and copper the strongest in nearly five months before retreating.

“It’s short-covering by funds and CTAs (commodity trading advisors). Copper went up through resistance, as did zinc,” a London trader said.

CTAs, also known as managed future funds, often use computer trading strategies based on chart patterns.

“The background sentiment is more positive these days, particularly following those figures from the States last week, not to mention the PMI from China.”

Prospects for economic recovery gathered pace following last week’s encouraging U.S. jobs data and upbeat factory numbers from top consumer China that reinforced expectations of a pick-up in demand.

Benchmark London Metal Exchange (LME) zinc climbed to a session high of $2,318.50 a tonne, its strongest since Aug. 5, 2011, before paring gains to closed at $2,282, up 0.84 percent.

One trader said some prices retreated partly due to some speculators taking fresh short positions in zinc and lead.

The metal used for galvanising steel has risen about 10 percent so far this year, lifted by expectations that mine closures and declining ore grades would lead to shortages.

Broker Triland said zinc was attracting investment fund buying following a strong weekly close on Friday.

“The price has cleared the horizontal resistance zone around $2,230-35 and with all moving averages pointing higher and the price sitting comfortably above them, the bull trend is strengthening,” it said.

“We believed there may be some correction to come this week, but have been proved wrong, to the consternation of some consumers who may have missed the boat now.”

COPPER, ALUMINIUM

Copper jogged to a session high of $7,212 a tonne, the strongest since Feb. 19, before retreating to finish at $7,130, down 0.1 percent.

Copper, widely used in the power sector and in construction, posted its biggest weekly rise in more than nine months last week, but some analysts believe traders could be tempted to cash in.

“After a stellar rally for the metal, the profit-taking mood is very much dominant among traders and this can cause a little pullback,” said Naeem Aslam, chief market analyst at Ava Trade.

“Having said that, the fundamentals are still strong and any pullback could only be a small correction before the big uptrend prevails.”

Favourable fundamentals include inventory levels in LME-registered warehouses, which, at 158,050 tonnes, are at their lowest in nearly six years. MCU-STOCKS

Doubts about the outlook for European demand remain, with recent data from Germany pointing to a soft patch.

German exports and imports dropped much more than expected in May, coming on the heels of other soft indicators that have signalled Europe’s largest economy is losing momentum.

Potentially easing supply curbs for copper, Freeport-McMoRan Copper & Gold Inc agreed a memorandum of understanding with Indonesia on contract renegotiations, officials said, as both sides look to end a six-month dispute that has halted concentrate exports.

Aluminium closed up 0.78 percent at $1,939 a tonne after touching a peak of $1,950, the highest since June 7, 2013.

Lead ended up 1.1 percent at $2,217 a tonne and nickel jumped 2.4 percent to $19,775.

Tin bucked the trend, sliding 0.77 percent to close at traded at $22,500.

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 Dale Hudson and Louise Heavens)

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