March 1, 2017 / 11:50 AM / 3 years ago

METALS-China data helps fuel copper's rise to one-week high

* China domestic and export demand pick up

* Fed rate rises would suggest strong U.S. growth

* Supply disruptions support sentiment (Updates prices)

By Pratima Desai

LONDON, March 1 (Reuters) - Copper prices rose to their highest in more than a week on Wednesday as manufacturing data from top consumer China showed potential for strong demand, reinforcing worries about shortages due to supply disruptions.

Benchmark copper on the London Metal Exchange ended up 0.7 percent at $6,016 a tonne from an earlier $6,090, its highest since Feb. 21.

Factory activity in China expanded faster than expected in February as domestic and export demand picked up, adding to signs that the global economy is gaining momentum even as fears grow of a surge in trade protectionism.

“Chinese data is definitely a reason to be bullish on industrial metals,” Commerzbank analyst Eugen Weinberg said.

“If the Fed goes for more rate hikes (than expected) this year, then it’s due to underlying economic dynamics proving to be more positive than expected, which is a good thing.”

But prices were capped by a stronger U.S. currency, which when it rises makes dollar-denominated commodities more expensive for non-U.S. firms, potentially weakening demand.

The dollar hit its highest in seven weeks as comments from two influential Federal Reserve policymakers were interpreted to mean that U.S. rates could rise at the March meeting.

However, supply disruptions in Indonesia and Chile are a positive for copper.

Freeport-McMoRan’s inability to export copper concentrate since mid-January and a strike at BHP Billiton’s Escondida mine in Chile - the world’s largest - last month pushed copper to 21-month highs of $6,204 a tonne.

“Potential mine supply disruptions are not the only factors supporting higher prices. The demand backdrop for copper should strengthen this year as well,” UBS analysts said in a note.

“We expect global economic growth to accelerate, driven by firmer industrial production. With global economic activity improving, copper demand is likely to expand towards 3.7 percent this year from 3 percent last year.

Three-month aluminium rose 1.3 percent to $1,949 a tonne from an earlier $1,957, its highest since May 2015.

Aluminium’s gains have been fuelled by China ordering aluminium producers in 28 cities to slash output during the winter months as Beijing intensifies its war on smog.

China accounts for nearly 60 percent of the world’s aluminium production estimated at more than 60 million tonnes this year.

Zinc gained 1.3 percent to $2,862, lead rose 2.1 percent to $2,305.5, tin was up 1.6 percent to $19,525 and nickel added 0.5 percent to $11,030.


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 Louise Heavens and David Evans)

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