Copper moves higher

28 Sep, 2012

Copper rose on Thursday, on prospects that demand from the metal's top consumer China could recover by the end of the year, but a firmer dollar, an approaching Chinese holiday and concerns about Europe's debt crisis kept gains in check. Benchmark copper on the London Metal Exchange (LME) rose from two-week lows hit in the previous session to close at $8,175 a tonne from a close of $8,120 on Wednesday.
Data showed orders for long-lasting US manufactured goods fell sharply in August, suggesting the main engine of economic growth was stalling, pointing to continued prospects of measures to support the economy. These were seen as being supportive of copper prices. Stimulus measures already announced by the US Federal Reserve and the European Central Bank have helped put copper on track for a gain of more than 7 percent for September. It is trading 7.5 percent higher in the year to date.
"People are a bit more clear on the macro outlook for China for the end of the year. It is likely to register growth of just under 8 percent so that will be positive for base metals," said Andrey Kryuchenkov, analyst at VTB Capital. "But until we hear more about what is happening in Spain and the euro zone, copper is likely to trade within its current range."
Copper product makers in China, where demand is expected to improve modestly in the fourth quarter, are getting their books in order before a week-long holiday beginning on Monday that is likely to pare volume and direction from the market. China accounts for around 40 percent of global demand for refined copper. "You're only two days away from the start of big holidays in China, so people are looking to square books and cut risk," said Ivan Szpakowski, a Credit Suisse analyst in Singapore.
Economic data due next week is likely to provide fresh direction for metals prices. China's National Bureau of Statistics manufacturing PMI for September is due on October 1, with US non-farm payrolls data for September on October 5. Gains in base metals were capped by worries about the euro zone debt crisis and uncertainty about a bailout for Spain. Spain announced a detailed timetable for economic reforms and a tough 2013 budget based primarily on spending cuts on Thursday in what many see as an effort to pre-empt the likely terms of any international bailout.
In other metals, battery material lead closed at $2,270 a tonne, from Wednesday's close of $2,264, while tin closed at $21,195 from $20,800. Aluminium ended at $2,108 a tonne, from a last bid of $2,071 on Wednesday, and nickel at $18,345 a tonne from a last bid of $18,055. Colombia's government said it expects output from the Cerro Matoso nickel mine to rise to 51,100 tonnes in 2012 from 37,810 last year. It also announced it would renegotiate outdated contract terms including royalty payments from the BHP Billiton mine.
Global miner Xstrata said it was suspending operations at its Cosmos nickel mine in Western Australia due to prolonged weakness in prices for the metal and a strong Australian dollar. Zinc closed at $2,083 from $2,071 at the close on Wednesday.

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