June 13, 2016 / 9:22 AM / 4 years ago

METALS-Copper boosted by soft dollar though China worries to weigh

* Looking for more stimulus in top consumer China

* China fixed-asset investment growth falls below 10 percent

* Zinc up about 28 percent so far this year (Updates with closing prices)

By Pratima Desai

LONDON, June 13 (Reuters) - Copper prices rose on Monday, boosted by the dollar’s softer tone due to expectations the U.S. Fed will keep rates on hold this week, though weak investment data from top consumer China was expected to limit gains.

Benchmark copper on the London Metal Exchange closed up 1 percent at $4,557 a tonne, paring gains from an earlier high of $4,589.

News the U.S. economy created the fewest number of jobs in May for any month since September 2010 has led the market to think the U.S. central bank will not raise interest rates this week, which has weighed on the dollar.

When the U.S. currency falls it makes dollar-denominated commodities such as copper cheaper for non-U.S. firms.

“It’s too early for the Americans to do much with interest rates,” SP Angel analyst John Meyer said. “We’re looking for more stimulus in China, where it’s quite possible that supporters of infrastructure growth will push their agenda.”

Growth in China’s fixed-asset investment slipped below 10 percent for the first time since 2000 in the first five months of the year as a boost from record credit growth faded, putting expectations of further stimulus back on the table.

Factory output grew 6 percent in May from a year earlier, the same as in April, but investment in real estate posted its first year-on-year slowdown in growth since December.

Analyst Dane Davis at Barclays said an influx of copper inventories last week into LME warehouses might be a warning signal of a surplus that will weigh on prices.

“We may be getting an early sign that the market is playing the same song as last year, whereby a short-term bounce in the spring masks deeper structural issues and a fundamental mismatch between demand and supply,” Davis said in a note.

Three-month zinc fell 0.4 percent to end at $2,077 a tonne. But the metal used to galvanise steel last week hit $2,105.50, its highest since July last year. It is up about 28 percent so far this year on worries about shortages in 2016.

“The recent run-up is too much, too soon, considering persistent Chinese weakness and the risk that recent yuan depreciation and higher prices may trigger increased Chinese zinc production from marginal sources,” TD Securities analysts said in a note.

“Much of the zinc rally can be traced to speculative buying and at these levels seems unsupported by real economic drivers, which may unceremoniously unwind if China economic data turns more disappointing.”

Three-month aluminium closed 1.7 percent firmer at $1,600 a tonne, lead rose 0.9 percent to finish at $1,711, tin added 0.3 percent to $17,150 and nickel lost 0.3 percent to $8,890.


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 (Additional reporting by Naveen Thukral in Singapore and Eric Onstad in London; Editing by Ruth Pitchford)

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