December 9, 2019 / 10:54 AM / a month ago

METALS-Copper scales 4-1/2-month peak on China demand optimism

* GRAPHIC-2019 asset returns: tmsnrt.rs/2jvdmXl

* Cancelled copper warrants more than 40% of LME stocks (Updates with closing prices)

By Pratima Desai

LONDON, Dec 9 (Reuters) - Copper prices climbed to 4-1/2-month highs on Monday as hopes of stronger growth and demand in top consumer China were reinforced by numbers showing surprisingly robust imports.

However, nervousness about the United States and China agreeing a so-called “phase one” deal aimed at de-escalating their prolonged trade dispute weighed on sentiment.

Benchmark copper on the London Metal Exchange ended up 1.4% at $6,075 a tonne in official rings. Prices of the metal used by investors as a gauge of economic health peaked at $6,076.50, the highest since July 22.

“Data from China’s manufacturing sector points to expansion and the import numbers support that idea,” said Quantitative Commodity Research analyst Peter Fertig.

“Fiscal and monetary stimulus by Chinese authorities is starting to feed through to economic activity.”

DATA: China’s overall imports unexpectedly rose 0.3% from a year earlier, marking the first year-on-year growth since April and above the consensus for a 1.8% decline.

China’s factory activity showed surprising signs of improvement in November, with growth picking up to a near three-year high, a private sector survey showed last week.

COPPER: China’s copper imports rose to 483,000 tonnes in November, up 12.1% from the previous month to their highest in more than a year.

TRADE: China said on Monday that it hoped to agree a trade deal with the United States as soon as possible, amid intense discussions before new U.S. tariffs on Chinese imports are due to kick in on Dec. 15.

STOCKS: Also supporting copper prices are sliding stocks of the metal in LME warehouses and cancelled warrants — metal earmarked for delivery — at more than 40% of the total. Stocks stand at 190,825 tonnes MCUSTX-TOTAL.

TECHNICALS: Strong support for copper at $5,995, the 200-day moving average breached on Friday.

SPREAD: The premium for the cash over the three-month aluminium contract was at $7 a tonne, down from $22 at the start of December, the highest since July last year.

It appeared last month MALSTX-TOTAL and has attracted large amounts of aluminium to LME warehouses. Stocks at more than 1.28 million tonnes are at their highest since February and up more than 30% since early November.

Three-month aluminium closed down 0.5% at $1,757.

PRICES: Zinc and lead were little changed at $2,239 and $1,893 respectively, tin gained 0.3% to $17,120 and nickel lost 1% to $13,340 a tonne. (Reporting by Pratima Desai; editing by Ed Osmond, Kirsten Donovan)

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