April 2, 2012 / 10:00 AM / 8 years ago

METALS-Copper leads commodities up on China, US

* Copper surges on first day of new quarter
    * China, U.S. manufacturing data drive rally
    * Copper pushing up toward top end of range
    * Coming up: U.S. factory orders data on Tuesday

    By Chris Kelly and Maytaal Angel	
    NEW YORK/LONDON, April 2 (Reuters) - Copper surged on the first trading day
of the new quarter Monday, posting its biggest one-day gain in 6 weeks, after
upbeat manufacturing data from China and the United States calmed worries over
demand prospects for industrial metals.	
    Up over 2 percent, copper led all gainers within the 19-commodity Thomson
Reuters-Jefferies CRB index on Monday as investment demand improved for
the red metal after surprisingly strong Chinese factory data and further growth
in U.S. manufacturing.	
    "It's a big shot in the arm for copper prices," said Michael Gross, futures
analyst with Optionsellers.com in Tampa, Florida. "First with the Chinese data
this morning and then the ISM later in the day confirming stronger demand here
in the U.S." 	
    London Metal Exchange (LME) three-month copper closed up $195 or 2.3
percent at $8,640 a tonne, its biggest daily gain since Feb. 21, when copper
rallied 2.6 percent.	
    In New York, the COMEX May contract shot up 9.60 cents or by 2.5
percent to settle at $3.9210 per tonne, near the upper end of its $3.8285 to
$3.9325 session range.	
    A stream of new orders buoyed factory activity in China to an 11-month high
in March, according to the official PMI, but credit-constrained smaller
manufacturers struggled, suggesting the economy was still losing steam.
    U.S. data showed the pace of growth in the manufacturing sector had picked
up a tad in March, underscoring views about how the economy is recovering at a
gradual clip even as February construction spending figures disappointed.
    Elsewhere, data showed the euro zone's manufacturing sector in March shrank
for an eighth month and at a faster pace, adding to signs the bloc is in
recession as the downturn spreads to core members France and Germany.
    Optionseller.com's Gross said the U.S. and Chinese data were good pieces of
news in a market that has lacked convincing news flows lately.	
    "That being said, we're still in a range right now," he said.	
    Copper has held in a wide band between the $8,100 and $8,800 per tonne
levels ($3.70-$4 per lb) since late January -- a range likely to remain in play
as investors weigh the prospects of a slowdown in China against signs of
improvement in the U.S. economy.	
    Industry trade figures out on Friday reflected the market's indecisive tone.	
    Data from the Commodity Futures Trading Commission (CFTC) showed the
non-commercial net long position in COMEX copper fell after traders closed out
4,500 lots in long positions, and trimmed short positions by 300 lots.	
    Still, price trends in copper are very sensitive to developments in China,
which consumes around 40 percent of the world's copper. Copper is up about 12
percent this year as worries over the debt-strained euro zone have eased and the
U.S. economy has begun to pick up.	
    "We don't buy today's move as the beginning of a bullish phase, because we
think the Chinese economy is still slowing down and at the same time the central
bank is not yet willing to cut interest rates," said Gianclaudio Torlizzi,
analyst at metals consultancy T-Commodity.	
    London nickel futures have risen just 1 percent this year, making it
the worst performing metal in the complex, though some analysts are now turning
more optimistic, saying the selling has been overdone given changing
    "Feedback from the recent days suggests Chinese buyers (are) rushing to
restock at what are believed to be low prices. This is reflected in rising
physical spot premiums over the last week or so," said Macquarie analysts in a
    "The LME nickel price is now trading below domestic prices in China, which
makes buying imports more attractive, and currently prevailing price levels are
trading below cash production costs for some nickel pig iron production in
China," they added.	
    Nickel closed up $400 at $18,225 a tonne.	
    Aluminium ended up $4 at $2,130 a tonne.	
    In industry news for aluminium, state-run Aluminium Corp of China Ltd
  agreed to pay $926 million for a controlling stake in
Mongolian coal miner SouthGobi Resources in a deal with mining billionaire
Robert Friedland's Ivanhoe Resources.     	
    The deal marks the first foray into coal by Chalco, which is facing a bleak
outlook in aluminium, and will give it access to a large coal producer in
neighbouring Mongolia. 	
 Metal Prices at 1908
  Metal            Last      Change  Pct Move   End 2011   Ytd Pct
  COMEX Cu       391.55        9.05     +2.37     343.60     13.96
  LME Alum      2130.00        4.00     +0.19    2020.00      5.45
  LME Cu        8640.00      195.00     +2.31    7600.00     13.68
  LME Lead      2062.00       22.00     +1.08    2035.00      1.33
  LME Nickel   18220.00      395.00     +2.22   18710.00     -2.62
  LME Tin      23245.00      445.00     +1.95   19200.00     21.07
  LME Zinc      2006.00        5.00     +0.25    1845.00      8.73
  SHFE Alu     16165.00       -5.00     -0.03   15845.00      2.02
  SHFE Cu*     60010.00      270.00     +0.45   55360.00      8.40
  SHFE Zin     15445.00      105.00     +0.68   14795.00      4.39
 ** Benchmark month for COMEX copper
 * 3rd contract month for SHFE AL, CU and ZN
 SHFE ZN began trading on 26/3/07
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