June 23, 2015 / 10:09 AM / in 5 years

METALS-China data fuels copper rally, market remains cautious

* GRAPHIC-China orders vs copper: link.reuters.com/xak94w

* Benchmark copper rises 2 pct (Adds detail, comment, closing prices)

By Pratima Desai

LONDON, June 23 (Reuters) - Copper prices rallied on Tuesday after improved manufacturing data from top consumer China bolstered sentiment, though gains are expected to be capped by seasonal demand weakness ahead and the strength of the dollar.

Benchmark copper on the London Metal Exchange ended up more than 2 percent at $5,780 a tonne. The metal used in power and construction had closed at $5,654 on Monday after hitting a three-month low of $5,642.50.

The HSBC/Markit Flash China manufacturing PMI showed contraction, but it also suggested stabilisation. The new orders component showed expansion, while export orders fell at a slower pace.

“The new orders and export numbers suggest a boost for industrial activity and metal use,” said Caroline Bain, senior commodities economist at Capital Economics.

“The stimulus we’ve already seen in China is starting to come through in the data ... But it’s still within the context of China meeting its 7 percent growth target; it doesn’t mean the economy is going to take off.”

Historically, China’s demand for industrial metals slows in the third quarter.

The higher U.S. currency makes commodities such as copper more expensive for companies based outside the United States.

Three-month aluminium touched $1,738, its highest in more than a week. The metal used in transport and packaging closed at $1,725, from Monday’s $1,709.

Aluminium’s bounce has tested the 21-day moving average sitting at $1,735, but traders say gains are unlikely to be sustained.

Zinc firmed to $2,055, from $2,033 on Monday, while lead rose to $1,796 from $1,765.

Nickel rose to $12,860 from $12,410, having hit a three-month low of $12,409 on Monday.

The stainless steel ingredient was boosted by short-covering and Chinese imports of the refined metal, which in May jumped to 23,146 tonnes, the highest since October 2011 and up 28.7 percent from April.

“The increase is likely a function of the launch of the (Shanghai Futures Exchange) nickel contract and expectations regarding deliverability criteria,” Standard Bank said in a note.

Traders say the market is worried there may not be enough nickel for the July delivery of the SHFE contract because only six Chinese producers have been approved to supply metal against the new contract.

Tin edged 0.1 percent higher to $15,370 a tonne, having touched a two-week high of $15,415 in morning trade.


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

Most active ShFE nickel

Three month LME tin

Most active ShFE tin

Editing by David Goodman

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