August 20, 2014 / 3:03 AM / 6 years ago

METALS-London copper revives as shorts cover

* Copper premiums in Shanghai bonded zone off 37 pct since July 10

* ShFE moving day average seen at 48,608 yuan a tonne

* Coming Up: Fed releases minutes of July meeting at 1800 GMT (Adds comment, details, updates prices)

By Melanie Burton

SYDNEY, Aug 20 (Reuters) - London copper climbed on Wednesday as a mix of short-covering and a constructive technical picture revived momentum, and as some buyers in top consumer China appeared to be taking advantage of lower prices to restock.

Buying was also seen in zinc and nickel, which climbed around 1 percent.

Adding to the brighter picture, housing starts in the United States surged to an eight-month high in July, suggesting a housing market recovery was back on track after stalling in the second half of last year.

The outlook has been more mixed in top metals user China, where an ailing property sector is dragging on growth.

“We should not be too bearish,” said analyst Helen Lau at UOB-Kai Hian Securities in Hong Kong.

“The down season is coming to an end now. Starting from September, there will be some recovery in seasonal demand at the utilisation rate at fabricators.”

Three-month copper on the London Metal Exchange had climbed 0.7 percent to $6,916.50 a tonne as of 0709 GMT, reversing losses in the previous session. The price fell to $6,821 last week, its weakest since June 23.

Chart support around the 100-day moving average in the $6,860 area held well, so short holders were forced to cover, one trader said, adding: “Asian buying on metals today is also helping support.”

The trader put resistance at $6,930-40, a break of which could fuel fresh buying.

The most traded October copper contract on the Shanghai Futures Exchange cut early losses to climb 0.7 percent to 49,530 yuan($8,063) a tonne.

Domestic premiums for copper in China crept up to more than 200 yuan per tonne earlier this week from less than 150 during most of July, suggesting some end-users were taking advantage of lower prices to restock.

But demand for metal in bonded zones has remained modest since banks tightened lending terms after a financing scandal in Qingdao. Premiums are down by 37 percent to $85-$95 since July 10, according to China data provider Shmet.(

Reflecting a squeeze on supply, cash jumped to a $2.75 premium over the benchmark, its highest since early June 2013.

A flash gauge of health in China’s factory sector is set for release on Thursday.

China ought to loosen monetary policy further through “modest” cuts in bank lending rates and reserve requirements by next year to spur economic growth, a researcher at a government think tank said.

The world’s biggest mining company, BHP Billiton , announced plans to spin off businesses worth an estimated $16 billion, most of them acquired in a 2001 merger, to focus on its most profitable activities.

A forecast tin deficit is unlikely to materialise after increased output coincided with weak demand from the key electronics sector, industry group ITRI said on Tuesday.


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

Three month LME tin

1 US dollar = 6.1408 Chinese yuan 1 US dollar = 6.1426 Chinese yuan Reporting by Melanie Burton; Editing by Edwina Gibbs, Richard Pullin and Alan Raybould

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